Exhibit 2.1
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SHARE PURCHASE AGREEMENT
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BETWEEN
XXXXXX XXXXXX, XXXX XXXXXXX, XXXXX XXXXXXXXX,
THE XXXXXX FAMILY TRUST NO. 1, THE XXXXXXX FAMILY TRUST NO. 1,
THE XXXXXXXXX FAMILY TRUST NO. 1, 0740613 B.C. LTD. and 0753831 B.C. LTD.
- and -
THE STRIDE RITE CORPORATION
-and
STRIDE RITE CANADA LIMITED
September 5, 2006
TABLE OF CONTENTS
Section Description Page
ARTICLE 1 INTERPRETATION.....................................................2
1.1 Defined Terms....................................................2
1.2 Currency.........................................................7
1.3 Sections and Headings............................................7
1.4 Number, Gender and Persons.......................................7
1.5 Accounting Principles............................................7
1.6 Time of Essence..................................................8
1.7 Construction.....................................................8
1.8 Knowledge........................................................8
1.9 Applicable Law...................................................8
1.10 Severability.....................................................8
1.11 Waiver...........................................................8
1.12 Schedules........................................................8
ARTICLE 2 PURCHASE AND SALE..................................................9
2.1 Purchase and Sale................................................9
2.2 Purchase Price...................................................9
2.3 Purchase Price Allocation.......................................10
2.4 Working Capital Adjustment......................................10
2.5 Pre-Closing Transactions........................................13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE VENDORS.....................13
3.1 Basis of Representations........................................13
3.2 Representations and Warranties Relating to the
Vendors Regarding the Purchased Shares..........................13
3.3 Representations and Warranties Relating to the Robeez
Group...........................................................15
3.4 Nature and Survival of Representations and Warranties...........32
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND SRCL.................33
4.1 Basis of Representations........................................33
4.2 Representations and Warranties of Parent and SRCL...............33
4.3 Nature and Survival of Representations and Warranties...........34
ARTICLE 5 COVENANTS OF THE VENDORS..........................................34
5.1 No Shop; Transfer...............................................34
5.2 Access to the Robeez Group......................................35
5.3 Delivery of Books and Records...................................35
5.4 Conduct Prior to Closing........................................35
5.5 Delivery of Documents...........................................36
5.6 Notice to Purchaser.............................................36
5.7 Expenses........................................................36
5.8 Delivery of Robeez Group Closing Documentation..................36
ARTICLE 6 COVENANTS OF THE PURCHASER........................................37
6.1 Delivery of the Purchaser's Closing Documentation...............37
6.2 Tax Returns.....................................................37
6.3 Expenses........................................................37
ARTICLE 7 CONDITIONS OF CLOSING.............................................37
7.1 Conditions of Closing in Favour of the Purchaser................37
7.2 Conditions of Closing in Favour of the Vendors..................38
ARTICLE 8 CLOSING...........................................................39
8.1 Place of Closing................................................39
8.2 Deliveries by Vendors at Closing................................39
8.3 Deliveries by Purchaser at Closing..............................40
8.4 Closing Escrow..................................................41
ARTICLE 9 INDEMNIFICATION...................................................41
9.1 Indemnification by the Vendors..................................41
9.2 Indemnification by the Parent and SRCL..........................42
9.3 Manner of Payment...............................................42
9.4 Notice of Third Party Claims....................................42
9.5 Defence of Third Party Claims...................................42
9.6 Assistance for Third Party Claims...............................43
9.7 Failure to Give Timely Notice...................................43
9.8 Limitations.....................................................44
9.9 Indemnity Holdback..............................................44
9.10 All Claims......................................................44
9.11 Certain Taxes and Fees..........................................45
9.12 Tax Liabilities.................................................45
9.13 Principal Indemnities...........................................45
9.14 Change of Control Holdback......................................45
9.15 Idealever Holdback..............................................47
ARTICLE 10 GENERAL..........................................................48
10.1 Confidentiality of Information..................................48
10.2 Notices.........................................................49
10.3 Entire Agreement................................................50
10.4 Tax Information.................................................50
10.5 Enurement.......................................................50
10.6 Further Assurances..............................................50
10.7 Commissions, etc................................................50
10.8 Disclosure......................................................51
10.9 Public Announcements............................................51
10.10 Best Efforts....................................................51
10.11 Counterparts....................................................52
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made the 5th day of September, 2006,
BETWEEN:
XXXXXX XXXXXX, of 0000 Xxxxxx Xxxxx, Xxxxx Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0 ("Xxxxxx")
AND:
XXXX XXXXXXX, of 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0 ("Xxxxxxx")
AND:
XXXXX XXXXXXXXX, of 00000 - 000X Xxxxxx,
Xxxxx Xxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0 ("Xxxxxxxxx")
AND:
0740613 B.C. LTD., a British Columbia company ("WilsonCo")
AND:
0753831 B.C. LTD., a British Columbia company ("FingarsonCo")
AND:
THE XXXXXX FAMILY TRUST NO. 1, a trust
formed under the laws of British Columbia ("Xxxxxx Trust")
AND:
THE XXXXXXX FAMILY TRUST NO. 1, a trust formed under
the laws of British Columbia ("Xxxxxxx Trust")
AND:
THE XXXXXXXXX FAMILY TRUST NO. 1, a trust formed
under the laws of British Columbia ("Xxxxxxxxx Trust")
(Wilson, Garrett, Xxxxxxxxx, WilsonCo, FingarsonCo,
Xxxxxx Trust, Xxxxxxx Trust and Xxxxxxxxx Trust,
collectively, the "Vendors")
AND:
THE STRIDE RITE CORPORATION, a corporation incorporated under the
laws of the Commonwealth of Massachusetts,
United States of America (the "Parent")
AND:
STRIDE RITE CANADA LIMITED, a corporation amalgamated under the laws
of the province of Ontario (the "Purchaser")
WHEREAS:
A. The Vendors own all of the shares in the capital of Robeez Holdings, Robeez
International and Robeez US Holdings Ltd. (each as hereinafter defined);
B. The Vendors have agreed to sell or cause to be sold to SRCL and SRCL has
agreed to purchase from the Vendors, all of the outstanding shares of Robeez
Holdings, Robeez International and Robeez US Holdings Ltd., upon and subject to
the terms and conditions set out in this Agreement;
THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants, agreements, representations, warranties and indemnities herein
contained and for other good and valuable consideration (the receipt and
sufficiency of which are acknowledged by each party), the parties covenant and
agree as follows,
ARTICLE 1
INTERPRETATION
1.1 Defined Terms
For the purposes of this Agreement, unless the context otherwise requires,
the following terms shall have the respective meanings specified or referred to
below and grammatical variations of such terms shall have corresponding
meanings:
(a) "Act" means the Business Corporations Act (British Columbia), as in
effect on the date hereof;
(b) "Affiliate" has the meaning attributed to that term in the Act;
(c) "Agreement" means this Share Purchase Agreement and all amendments
hereto made by written agreement between the parties hereto;
(d) "Associate" has the meaning attributed to that term in the Act;
(e) "Audited Financial Statements" means the audited financial
statements of the Robeez Group as at and for the financial year
ended August 31, 2005, including the notes thereto and the report of
the auditors thereon, a copy of which are annexed hereto as
Schedule 1.1(e);
(f) "Business" means the business currently carried on by the Robeez
Group, consisting of the manufacturing, marketing and distribution
of soft-soled children's footwear and related accessories;
(g) "Business Day" means any day other than a Saturday, Sunday or
statutory holiday in the Province of British Columbia or the
Commonwealth of Massachusetts;
(h) "CapWest Fee" means $500,268.06;
(i) "Change of Control Holdback" means the sum of $861,743 to be paid by
the Purchaser to the Escrow Agent and retained in accordance with
the Escrow Agreement and Section 9.14;
(j) "Closing" means the completion of the purchase and sale of the
Purchased Shares;
(k) "Closing Balance Sheet" has the meaning set out in Section 2.5(b);
(l) "Closing Date" means September 5, 2006 or such other date as
may be mutually agreed upon by the Vendors and the Purchaser;
(m) "Closing Time" means 12:00 p.m. (Vancouver, Canada time) on the
Closing Date;
(n) "Closing Working Capital" of the Robeez Group means the amount
(which may be a negative amount) equal to the Current Assets of the
Robeez Group less the Current Liabilities of the Robeez Group as
reflected on the consolidated balance sheet of the Robeez Group
prepared in accordance with GAAP as at the Effective Time on the
Closing Date and calculated in accordance with the example set
forth in Exhibit 4, which for greater certainty shall not include
the amount of the Outstanding Third Party Debt;
(o) "Code" means the U.S. Internal Revenue Code of 1986;
(p) "Contract" means any agreement, indenture, contract, lease, deed of
trust, licence, option, instrument or other commitment, whether
written or oral;
(q) "Current Assets", at any date, means the aggregate, without
duplication, of cash, cash equivalents, inventory, accounts
receivable, other receivables and prepaid expenses;
(r) "Current Liabilities" at any date, means the aggregate, without
duplication, of accounts payable, payroll accruals/taxes, commodity
taxes payable, taxes payable, and accrued liabilities, but excluding
short-term portion of debt, leases and operating credit facilities;
(s) "Disclosure Schedules" means, collectively, all of the Schedules
appended to this Agreement and referenced in Section 1.12;
(t) "Dispute Notice" has the meaning set out in Section 2.5(c);
(u) "Effective Time" means 11:59 p.m. Pacific Daylight Time on the
Closing Date or such other time as the Purchaser and the
Vendors agree in writing;
(v) "Employee Plan" has the meaning set out in Section 3.3(v)(ii)(D);
(w) "Encumbrance" means any encumbrance, lien, charge, hypothecate,
pledge, mortgage, title retention agreement, security interest of
any nature, adverse claim, exception, reservation, easement, right
of occupation, any matter capable of registration against title,
option, right of pre-emption or privilege, whether registered or
registrable or whether consensual or arising by operation of law
(statutory or otherwise) or any Contract to create any of the
foregoing;
(x) "Escrow Agent" means SunTrust Bank, a Georgia banking corporation;
(y) "Escrow Agreement" means the escrow agreement to be entered into at
the Closing between the Purchaser, the Vendors and the Escrow Agent
with respect to the Working Capital Escrow Amount, the Change of
Control Holdback, Idealever Holdback and the Indemnity Holdback, in
the form attached hereto as Exhibit 5;
(z) "GAAP" means, at any time and in respect of any person, accounting
principles generally accepted in Canada in respect of the financial
statements of such person applied on a basis consistent with those
applied in the financial statements of such person for periods prior
to such time;
(aa) "Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other
instrumentality of Canada, the United States, any other country, any
province or state, any county, city or other political subdivision.
(bb) "Historical Financial Statements" means the Audited Financial
Statements and the Interim Financial Statements;
(cc) "Idealever Holdback" means the sum of $75,000 to be paid by the
Purchaser to the Escrow Agent and retained in accordance with the
Escrow Agreement and Section 9.15
(dd) "Indemnified Party" means any person entitled to indemnification
under this Agreement;
(ee) "Indemnitor" means any party obligated to provide indemnification
under this Agreement;
(ff) "Indemnity Holdback" means the sum of $1,500,000 to be paid by the
Purchaser to the Escrow Agent and retained in accordance with the
Escrow Agreement and Section 9.9;
(gg) "Indemnity Payment" means any amount of Loss required to be paid
pursuant to Section 9.1 or Section 9.2;
(hh) "Independent Accountants" has the meaning set out in Section 2.5(c);
(ii) "Intellectual Property" means all right, title and interest of
any member of the Robeez Group to all trade marks, trade names
(including logos), domain names, service marks, business or brand
names, copyrights, designs, patents, inventions and all applications
therefor, in each case whether or not registered, both domestic and
foreign, owned, licensed or used by any member of the Robeez Group;
(jj) "Interim Financial Statements" means the unaudited financial
statements of the Robeez Group as at and for the ten-month period
ended June 30, 2006, copies of which financial statements are
annexed hereto as Schedule 1.1(jj);
(kk) "Kenton's Change of Control Agreement" means the Employment
Agreement Effective Upon Change in Control of Corporation dated
May 1, 2006 between Robeez Footwear and Kenton Low, as amended by
Amendment to Employment Agreement Effective Upon Change in Control
of Corporation dated June 19, 2006;
(ll) "Kenton Low Option Termination Agreement" means the agreement dated
as of September 1, 2006 by and between Robeez Footwear and Kenton
Low;
(mm) "Leases" means the real or personal property leases or other rights
of occupancy relating to real property which are set forth in
Schedule 3.3(x);
(nn) "Licences" has the meaning set out in Section 3.3(jj);
(oo) "Loss" means any and all loss, liability, damage, cost or expense
including any Taxes incurred and including the costs and expenses of
any action, suit, proceeding, demand, assessment, judgment, order,
settlement or compromise relating thereto (including reasonable
attorney's fees);
(pp) "Material Adverse Change" or "Material Adverse Effect" means any
change, effect, event, occurrence or change in state of facts,
including any change, effect, event, occurrence or change in state
of facts relating to financial or capital market conditions, which,
individually or together with any other change, effect, event,
occurrence or change in state of facts is, or would reasonably be
expected to be, material and adverse to the business, operations,
properties, assets, liabilities, financial condition, results of
operations or prospects of the Robeez Group or the Business taken as
a whole, other than any change, effect, event, occurrence or change
in state of facts: (i) relating to the children's footwear industry
in general, and not specifically relating to the Robeez Group or the
Business, to the extent they do not disproportionately effect the
Robeez Group taken as a whole; (ii) relating to GAAP; or (iii)
directly attributable to the announcement or consummation of the
transactions contemplated by this Agreement, including, without
limitation, actions of competitors or any delays or cancellations by
customers of orders for products or services or losses of employees;
(qq) "Material Contracts" means the agreements set forth in Schedule
3.3(l);
(rr) "Mikel's Change of Control Agreement" means the Employment Agreement
Effective Upon Change in Control of Corporation dated
May 1, 2006 between Robeez Footwear and Xxxxx Xxxxxx;
(ss) "Outstanding Third Party Debt" means the operating line, term
debt and capital lease facilities of the Robeez Group,
including principal and interest, set out in Schedule 1.1(ss)
which are to be paid out by the Purchaser, on behalf of the
Robeez Group, at Closing;
(tt) "Permitted Encumbrances" means:
(i) servitudes, easements, restrictions, rights-of-way and other
similar rights in real property or any interest therein,
provided the same are not of such nature as to materially
adversely affect the use of the property subject thereto by
the Robeez Group;
(ii) undetermined or inchoate liens, charges and privileges
incidental to current construction or current operations save
and except for liens, charges and privileges related to taxes;
(iii) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms of any lease and liens or
rights reserved in any lease for rent or for compliance with
the terms of such lease;
(iv) security given in the ordinary course of the Business to any
public utility, municipality or government or to any statutory
or public authority in connection with the operations of the
Business, other than security for borrowed money; and
(v) the Permitted Encumbrances described in Schedule 1.1(tt);
(uu) "Pre-Closing Transactions" has the meaning set out in Section
2.6;
(vv) "Prime Rate" means the rate of interest per annum established and
reported by HSBC Bank Canada from time to time as the reference
rate of interest then in effect for the determination of interest
rates that it charges to customers of varying degrees of
creditworthiness for loans made by it in Canada and designated as
its "prime rate";
(ww) "Purchase Price" has the meaning set out in Section 2.2;
(xx) "Purchased Shares" means the shares listed in Schedule 3.2(h);
(yy) "Purchaser Material Adverse Effect" means any change, event,
circumstance or condition that has or results in a material adverse
effect (i) on the business, financial condition, assets,
liabilities, results of operations or prospects of the Purchaser
and its subsidiaries, taken as a whole, other than any change,
effect, event, occurrence or change in state of facts relating to:
(A) changes, effects or circumstances resulting from the
announcement of this Agreement or the consummation of the
transactions contemplated by this Agreement; or (B) any action
taken at the written request of the Robeez Group, or (ii) on the
ability of the Purchaser to consummate the transactions
contemplated by this Agreement.
(zz) "Purchaser's Solicitors" means the Purchaser's Canadian counsel,
Xxxxxxx Xxxxx & Xxxxxxxxx LLP of Toronto, Canada;
(aaa) "Purchaser's U.S. Counsel" means Xxxxxxx Procter LLP of
Boston, Massachusetts, USA;
(bbb) "Required Working Capital" of the Robeez Group means $4,600,000, on
a consolidated basis;
(ccc) "Robeez Australia" means Robeez Australia Pty. Limited, a
corporation incorporated under the laws of Australia;
(ddd) "Robeez Europe" means Robeez European Sales Ltd., a corporation
incorporated under the laws of the United Kingdom;
(eee) "Robeez Group" means Robeez Footwear, Robeez Holdings, Robeez
International, Robeez US Holdings Ltd., Robeez Ireland, Robeez
Europe, Robeez UK, Robeez Australia, Robeez Logistics, Robeez US
Holdings Inc. and Robeez US Inc.;
(fff) "Robeez Footwear" means Robeez Footwear Ltd., a corporation
incorporated under the laws of British Columbia;
(ggg) "Robeez Holdings" means Robeez Holdings Ltd., a corporation
incorporated under the laws of British Columbia;
(hhh) "Robeez Logistics" means Robeez Logistics Inc., a corporation
incorporated under the laws of the State of Nevada;
(iii) "Robeez International" means Robeez International Holdings Ltd., a
corporation incorporated under the laws of British Columbia;
(jjj) "Robeez Ireland" means Robeez (Ireland) Limited, a corporation
incorporated under the laws of Ireland;
(kkk) "Robeez UK" means Robeez (UK) Ltd., a corporation incorporated
under the laws of the United Kingdom;
(lll) "Robeez US Holdings Ltd." means Robeez US Holdings Ltd., a
corporation incorporated under the laws of British Columbia;
(mmm) "Robeez US Holdings Inc." means Robeez US Holdings Inc., a
corporation incorporated under the laws of the State of
Nevada;
(nnn) "Robeez US Inc." means Robeez U.S., Inc., a corporation
incorporated under the laws of the State of Washington;
(ooo) "Shareholders' Agreement" means the shareholder agreement dated
June 14, 2005 between Wilson, Garrett, Xxxxxxxxx and Robeez
Footwear;
(ppp) "Shareholders' Loans" means all direct or indirect indebtedness,
liabilities and obligations of the Robeez Group owing to the
Vendors or their Affiliates, including principal and interest
(excluding any member of the Robeez Group) to be paid out by the
Purchaser, on behalf of the Robeez Group, at Closing;
(qqq) "Tax Act" means the Income Tax Act (Canada) as amended from time
to time;
(rrr) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof;
(sss) "Tax" or "Taxes" means all taxes, duties, royalties, and other
fees, charges and levies, including without limitation, income
taxes, estimated taxes, alternative or add-on minimum taxes, excise
taxes, sales taxes, franchise taxes, employment and payroll related
taxes, withholding taxes, transfer taxes, gross receipts taxes,
license taxes, severance taxes, stamp taxes, occupation taxes,
premium taxes, windfall profits taxes, environmental taxes
(including taxes under Section 59A of the Code), customs duties
taxes, capital stock taxes, profits taxes, social security (or
similar) taxes, unemployment taxes, disability taxes, real property
taxes, personal property taxes, registration taxes, value added
taxes or other taxes of any kind whatsoever and all deficiencies,
or other additions to tax, interest, fines and penalties owed by
it, and including any obligation to indemnify or otherwise assume
or succeed to the tax liability of any other person or entity,
payable (i) in the United States (including taxes imposed under
Section 1374 of the Code), whether federal, state, local or
foreign, (ii) payable in Canada under the Tax Act, or (iii) payable
in any other jurisdiction in which the Robeez Group now operates or
previously operated, or is or previously was subject to taxation;
(ttt) "Third Party Claim" means any demand, action, suit, proceeding,
assessment, or other claim asserted against an Indemnified Party by
any person who is not a party to this Agreement or an Affiliate of
such a party which, if determined in favour of the claimant, would
entitle the Indemnified Party to indemnification under Section 9.1
or Section 9.2;
(uuu) "Treasury Regulations" means any regulations of the United States
Department of Treasury promulgated under the Code;
(vvv) "Trigger Date" has the meaning set forth in Section 2.5(c);
(www) "Vendors' Solicitors" means Farris, Vaughan, Xxxxx & Xxxxxx LLP of
Vancouver, British Columbia;
(xxx) "Working Capital Deficiency" of the Robeez Group means the amount,
if any, by which Required Working Capital of the Robeez Group
exceeds the Closing Working Capital;
(yyy) "Working Capital Escrow Amount" has the meaning set out in Section
2.5(a); and
(zzz) "Working Capital Surplus" of the Robeez Group means the amount, if
any, by which Closing Working Capital of the Robeez Group exceeds
the Required Working Capital.
1.2 Currency
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are expressed in lawful money of Canada.
1.3 Sections and Headings
The division of this Agreement into sections and the insertion of headings
are for convenience of reference only and shall not affect the interpretation of
this Agreement. Unless otherwise indicated, any reference in this Agreement to a
Section or a Schedule refers to the specified Section of or Schedule to this
Agreement.
1.4 Number, Gender and Persons
In this Agreement, words importing the singular number only shall include
the plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities.
1.5 Accounting Principles
All accounting terms not specifically defined herein, and all calculations
not specifically provided for herein, shall be construed and made in accordance
with GAAP.
1.6 Time of Essence
Time shall be of the essence of this Agreement.
1.7 Construction
The parties agree that each party and its counsel have reviewed and
revised this Agreement and that the normal rule of construction, to the effect
that any ambiguities are to be resolved against the drafting party, shall not be
employed in the interpretation of this Agreement or any amendments, schedules or
exhibits thereto.
1.8 Knowledge
Whenever a representation and warranty of the Vendors herein is qualified
by to the knowledge of, or to matters which are known to, the Vendors, such
qualification refers to the actual knowledge of Wilson, Garrett, Xxxxxxxxx,
Xxxxxx Low and Xxxxx Xxxxxx, and the knowledge that such individuals would have
if they had conducted a reasonable inquiry into the relevant subject matter.
Notwithstanding the above, whenever a representation and warranty of a Vendor in
Section 3.2 is qualified by to the knowledge of, or to matters which are known
to, such Vendor, such qualification refers to:
(a) in the case of Xxxxxx, the Xxxxxx Trust and WilsonCo, the actual
knowledge of Xxxxxx,
(b) in the case of Xxxxxxx and the Xxxxxxx Trust, the actual knowledge
of Xxxxxxx, and
(c) in the case of Xxxxxxxxx, the Xxxxxxxxx Trust and FingarsonCo, the
actual knowledge of Xxxxxxxxx,
and the knowledge that such individuals would have if they had conducted a
reasonable inquiry into the relevant subject matter.
1.9 Applicable Law
This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the parties shall be governed
by, the laws of the Province of British Columbia. Each party hereby irrevocably
and unconditionally submits to the non-exclusive jurisdiction of the courts of
the Province of British Columbia, Canada, and all courts competent to hear
appeals therefrom.
1.10 Severability
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
1.11 Waiver
No waiver of any provision of this Agreement shall be binding on any party
unless consented to in writing by such party. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision, nor shall any waiver
constitute a continuing waiver unless otherwise expressly provided.
1.12 Schedules
The following Schedules are attached to and form part of this Agreement:
Schedule 1.1(e) - Audited Financial Statements
Schedule 1.1(jj) - Interim Financial Statements
Schedule 1.1(tt) - Permitted Encumbrances
Schedule 1.1(ss) - Outstanding Third Party Debt
Schedule 2.6 - Pre-Closing Transactions
Schedule 3.2(h) - Purchased Shares
Schedule 3.3(g) - Outstanding Capital of the Robeez Group
Schedule 3.3(l) - Material Contracts
Schedule 3.3(m) - Third Party Consents
Schedule 3.3(p) - Changes since August 31, 2005
Schedule 3.3(s) - Taxes
Schedule 3.3(v) - Employee Matters
Schedule 3.3(x) - Real Property and Personal Property Leases
Schedule 3.3(z) - Insurance
Schedule 3.3(aa) - Banking Arrangements
Schedule 3.3(bb) - Directors and Officers
Schedule 3.3(dd) - Intellectual Property
Schedule 3.3(ee) - Related Party Transactions
Schedule 3.3(hh) - Legal and Regulatory Proceedings
Schedule 3.3(ii) - Environmental Matters
Schedule 3.3(jj) - Permits and Licences
Schedule 3.3(kk) - Business Restrictions
Schedule 3.3(mm) - Customers and Suppliers
Schedule 3.3(oo) - Product Warranties
Schedule 3.3(pp) - Jurisdictions
Schedule 3.3(qq) - Finder's Fees
Exhibit 1 - Form of Opinion of Vendors' Solicitors
Exhibit 2 - Form of Release
Exhibit 3 - Form of Opinion of Purchaser's Solicitors
Exhibit 4 - Form and Example of Closing Working Capital
Statement
Exhibit 5 - Form of Escrow Agreement
Exhibit 6 - Flow of Funds
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale
Subject to the terms and conditions hereof, the Vendors covenant and
agree to sell, assign and transfer, or cause to be sold, assigned and
transferred, to Purchaser, and Purchaser covenants and agrees to purchase,
the Purchased Shares, as listed on Schedule 3.2(h), from the Vendors.
2.2 Purchase Price
Subject to the adjustments set out in Sections 2.5, 9.9, 9.14 and 9.15,
the aggregate purchase price (the "Purchase Price") payable by the Purchaser for
the Purchased Shares shall be an amount equal to $30,500,000:
(a) less the amount of the Outstanding Third Party Debt paid out by the
Purchaser, on behalf of the Robeez Group, at Closing;
(b) less the amount of the Shareholders' Loans paid out by the Purchaser,
on behalf of the Robeez Group, at Closing;
(c) less the amount of the Change of Control Holdback;
(d) less the amount of the Indemnity Holdback; and
(e) less the amount of the Idealever Holdback.
The parties hereby agree that in no event shall the Purchase Price be
greater than $30,500,000.
2.3 Purchase Price Allocation
The Purchase Price shall be allocated as follows:
(a) 93% to the shares of Robeez Holdings as follows:
(i) first, to the class F shares of Robeez Holdings, the amount of
$17,298,435;
(ii) second, to the class E shares of Robeez Holdings, the amount
of $1.00; and
(iii) the balance to the class A shares of Robeez Holdings;
(b) 3.5% to the shares of Robeez US Holdings Ltd. as follows:
(i) first, to the Class A Voting Non-Participating Shares of
Robeez US Holdings Ltd., the amount of $12.60; and
(ii) the balance to the Class B Non-Voting Participating Shares of
Robeez US Holdings Ltd.; and
(c) 3.5% to the shares of Robeez International as follows:
(i) class E shares of Robeez International, the amount of $12.60;
and
(ii) the balance to the class A shares of Robeez International.
2.4 Funding of Payment of Purchase Price
The amounts to be paid by Purchaser pursuant to Sections 2.2(a) and 2.2(b)
shall be funded through a loan made by the Purchaser to Robeez Footwear, dated
as of the Closing Date.
2.5 Working Capital Adjustment
(a) Certificate of Estimated Closing Working Capital
(i) At least three (3) Business Days prior to the Closing Date,
the Vendors shall deliver to the Purchaser a certificate
signed by the Vendors setting out their good faith estimate
of Closing Working Capital in reasonable detail as of the
close of business on the Closing Date.
(ii) The Vendors shall give, and shall cause its advisers and the
officers of the Robeez Group to give, the Purchaser and its
advisers reasonable access to such books, records and
personnel of the Robeez Group (including the work papers of
the Robeez Group and their accountants relating to the
preparation of the estimate of Closing Working Capital) as
may be necessary to enable the Purchaser and its advisers to
review the estimated Closing Working Capital prior to
the Closing. The Purchaser shall have three (3) Business Days
following the receipt of the estimated Closing Working
Capital to review the same and the calculation thereof. On or
prior to the expiration of such three (3) Business Day
period, the Purchaser may deliver to the Vendors a written
statement (the "Purchaser Notice") accepting or objecting in
good faith to the estimated Closing Working Capital (or any
portion thereof). In the event that the Purchaser shall
object to the estimated Closing Working Capital, such
Purchaser Notice shall include a detailed itemization of the
Purchaser's objections and reasons therefor, and prior to the
Closing, the Purchaser and the Vendors shall in good faith
mutually agree on the amount of Closing Working Capital. If
the Purchaser does not deliver the Purchaser Notice to the
Vendors within such three (3) Business Day period, the
Purchaser shall be deemed to have accepted the estimated
Closing Working Capital; provided that, nothing in this
Section 2.5(a)(ii) shall prohibit or otherwise limit the
Purchaser or the Vendors in any way from making any change or
objection (including, without limitation, a change or
objection not otherwise raised with respect to the estimated
Closing Working Capital) pursuant to Sections 2.5(b) and (d)
following the Closing;
(iii) To the extent that the Vendors estimate, or that the parties
agree, that there is a Working Capital Deficiency or Working
Capital Surplus, as the case may be (in each case, the
"Working Capital Escrow Amount"), the amount of such Working
Capital Deficiency or Working Capital Surplus, as the case
may be, shall be deposited by the Purchaser with the Escrow
Agent and released in accordance with Section 2.5(d) and the
Escrow Agreement. To the extent that the parties cannot
mutually agree on the estimated Closing Working Capital the
parties agree that the Working Capital Escrow Amount
shall be the average of the last good faith proposals made by
the Vendors and the Purchaser.
(b) Closing Balance Sheet -- As soon as is practicable, and in any event
not later than 60 calendar days following the Closing Date, the
Vendors shall deliver to the Purchasers a consolidated balance
sheet for the Robeez Group (the "Closing Balance Sheet") and a
statement showing in reasonable detail the calculation of Closing
Working Capital (the "Closing Working Capital Statement") as of
the Effective Time on the Closing Date accompanied by a review
engagement report from Xxxx Xxxxxxxx Xxxx-Xxxxxx Xxxxxxx,
Chartered Accountants ("DMCL") prepared in accordance with GAAP.
The Vendors and the Purchaser, including the Purchaser's
accountants and representatives, will be entitled at all
reasonable times to review all current and prior year working
papers of the Robeez Group and DMCL and to have free access to
all information and calculations reasonably required by them to
satisfy themselves as to the method of preparation of the Closing
Balance Sheet and Closing Working Capital Statement. The fees
and expenses of DMCL in respect of the review of the Closing
Balance Sheet and the Closing Working Capital Statement shall be
paid by the Purchaser.
(c) Disputes -- If the Purchaser disagrees with the Closing Balance
Sheet or the Closing Working Capital Statement, it may, within 20
Business Days of the Trigger Date (defined below), deliver a notice
to the Vendors (a "Dispute Notice"), setting forth its calculation
of all or any of the amounts to be adjusted and/or any component
thereof and specifying, in reasonable detail, those items or
amounts in the applicable statement as to which the Purchaser
disagrees and the reasons for such disagreement. The Purchaser
shall be deemed to have agreed with all other items and amounts
contained in such statement other than those specified in such
Dispute Notice. If the Purchaser does not deliver a Dispute
Notice prior to the expiration of the 20 Business Day period
following the Trigger Date, the Closing Working Capital shall be
the amount set forth in the Closing Working Capital Statement.
For purposes of this Section 2.5(c), the Trigger Date shall mean
the date of delivery of the Closing Balance Sheet and Closing
Working Capital Statement, unless within ten (10) Business Days
of the delivery of the Closing Balance Sheet and Closing Working
Capital Statement the Purchaser has delivered to the Vendors a
reasonably detailed request for information or schedules (a
"First Request Notice"). If the Purchaser delivers a First
Request Notice within such period, the Trigger Date shall be the
date on which the Vendors provide the Purchaser with the
information or schedules requested in the First Request Notice,
unless, within five (5) Business Days the Purchaser has delivered
to the Vendors a reasonably detailed request for (i) information
or schedules which were not provided pursuant to the First
Request Notice; and/or (ii) additional information or schedules
directly related to the information or schedules provided
pursuant to the First Request Notice (a "Second Request
Notice"). If the Purchaser delivers a Second Request Notice then
the Trigger Date shall be the date on which the Vendors respond
in good faith to the Second Request Notice.
If a Dispute Notice is delivered by the Purchaser to the Vendors
pursuant to this Section 2.5(c), the Vendors and the Purchaser shall
negotiate in good faith to reach agreement on the disputed items or
amounts in order to determine the Closing Working Capital. If the
Vendors and the Purchaser are unable to resolve any dispute within
15 Business Days after the delivery of a Dispute Notice, the
disputed items and amounts will be submitted to an independent
accounting firm recognized nationally in Canada (the "Independent
Accountants") for determination pursuant to this Section.
The Independent Accountants shall be without material financial
relationship to any of the parties or their Affiliates, and shall be
mutually selected by the Purchaser and the Vendors, or if they are
unable to mutually agree upon the Independent Accountants within the
period of 15 Business Days referred to above, shall be Deloitte &
Touche LLP. The Purchaser and the Vendors will instruct the
Independent Accountants to deliver their written report to them
promptly. The report of the Independent Accountants shall be final,
conclusive and binding upon the parties, and shall not be subject to
appeal to any court or tribunal except for manifest error or any
errors of law contained therein or related thereto. The fees and
expenses of the Independent Accountants shall be paid one-half by
the Vendors and one-half by the Purchaser.
Upon any resolution or final determination of the Working Capital
Surplus or Working Capital Deficiency in accordance with the
provisions of this Section 2.5, the parties agree that they will
issue joint written instructions to the Escrow Agent in accordance
with the Escrow Agreement based on such resolution or final
determination.
(d) Payment of Working Capital Adjustment -- Upon final determination of
Closing Working Capital:
(i) if Closing Working Capital as finally determined is greater
than the Required Working Capital, the Purchase Price shall be
increased by the amount of such difference and the Purchaser
shall pay to the Vendors the amount of such difference within
five (5) Business Days after final determination of Closing
Working Capital; and
(ii) if Closing Working Capital as finally determined is less than
the Required Working Capital, the Purchase Price shall be
reduced by the amount of such difference and the Vendors shall
pay to the Purchaser the amount of such difference within five
(5) Business Days after final determination of Closing Working
Capital.
The Purchaser and Vendors shall jointly direct the Escrow Agent to
release the Working Capital Escrow Amount together with any interest
earned thereon in such proportions as may be necessary to comply
with the provisions above. If the Working Capital Escrow Amount is
insufficient to satisfy the amount payable to the Purchaser or to
the Vendors, as set out above, as the case may be, the liable
party(ies) shall pay the amount of such shortfall from funds
otherwise available from such party(ies), without interest.
Example 1: If the Vendors estimate Closing Working Capital to be
$5,100,000 and the Required Working Capital is $4,600,000, the
Purchaser would deposit $500,000 at Closing into escrow with the
Escrow Agent as the Working Capital Escrow Amount. If it is finally
determined by the parties that Closing Working Capital is actually
$5,000,000, $400,000 of the Working Capital Escrow Amount (plus a
proportionate amount of interest earned thereon) would be paid to
the Vendors by the Escrow Agent, and $100,000 of the Working Capital
Escrow Amount (plus a proportionate amount of interest earned
thereon) would be returned to the Purchaser by the Escrow Agent.
Example 2: If the Vendors estimate Closing Working Capital to be
$4,500,000 and the Required Working Capital is $4,600,000, the
Purchaser would deposit $100,000 at Closing into escrow with the
Escrow Agent as the Working Capital Escrow Amount. If it is finally
determined by the parties that Closing Working Capital is actually
$4,400,000, the entire Working Capital Escrow Amount (plus 100% of
the interest earned thereon) would be returned to the Purchaser, and
the Vendors would pay an additional $100,000 to the Purchaser,
without interest.
2.6 Pre-Closing Transactions
Prior to the Closing Time on the Closing Date, the Vendors and the Robeez
Group may complete the payments and the transactions referred to in Schedule 2.6
or such other transactions of the nature provided for in such Schedule as may be
proposed by the Vendors and approved by the Purchaser, acting reasonably (the
"Pre-Closing Transactions").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
3.1 Basis of Representations
(a) Except as set forth in the Disclosure Schedules, each of the Vendors
hereby represents and warrants to the Purchaser on a several (and
not joint and several basis) that each of the statements contained
in Section 3.2 is true and correct as at the time of execution and
delivery of this Agreement by the Vendors, except for any such
statement which expressly speaks as at some other time.
(b) Except as set forth in the Disclosure Schedules, each of the Vendors
hereby represents and warrants to the Purchaser on a joint and
several basis that each of the statements contained in Section 3.3
is true and correct as at the time of execution and delivery of this
Agreement by the Vendors, except for any such statement which
expressly speaks as at some other time.
(c) Any such statement which expressly speaks as at a time other than
the time of execution and delivery of this Agreement by any or all
of the Vendors was or will be true and correct as at the time at
which such statement speaks.
(d) Each of such statements will be true and correct at the Closing
Time.
(e) Each of the Vendors acknowledges that the Purchaser is relying on
such representations and warranties in connection with the purchase
of the Purchased Shares and the completion of the other transactions
contemplated hereunder.
3.2 Representations and Warranties Relating to the Vendors Regarding the
Purchased Shares
Each Vendor for himself, herself or itself, as the case may be, severally
(and not jointly and severally) represents and warrants to the Purchaser as
follows:
(a) Capacity -- Such Vendor has the capacity to own the Purchased Shares
owned by such Vendor, has the legal power, right and authority to
duly enter into this Agreement and to perform his, her or its
obligations hereunder.
(b) Duly Incorporated -- If such Vendor is a corporation, such Vendor is
duly organized, validly existing and in good standing under the laws
of its governing jurisdiction, and has all necessary power and
authority to execute and deliver this Agreement and to take all
action required pursuant hereto.
(c) Duly Formed -- If such Vendor is a trust, such Vendor has been duly
constituted, formed and organized as a trust under the laws of the
Province of British Columbia and its trustees have all necessary
power and authority to execute and deliver this Agreement and to
take all action required pursuant hereto.
(d) Binding and Enforceable Agreement -- This Agreement has been duly
executed and delivered by such Vendor and constitutes a legal,
valid and binding obligation of such Vendor enforceable in
accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency and other laws affecting the rights of
creditors generally and except that equitable remedies may be
granted only in the discretion of a court of competent
jurisdiction.
(e) Binding Effect of Other Agreements -- At the Closing Time, each
agreement contemplated to be executed and delivered hereunder by
such Vendor at or before the Closing Time will have been duly
executed and delivered by such Vendor and shall constitute a
legal, valid and binding obligation of such Vendor enforceable in
accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency and other laws affecting the rights of
creditors generally and except that equitable remedies may be
granted only in the discretion of a court of competent
jurisdiction.
(f) Litigation and Related Matters -- (i) There are no claims, actions,
suits, investigations or proceedings pending or, to the best of
the knowledge of such Vendor, threatened, against or affecting
the Purchased Shares or his, her or its ability to consummate the
transactions contemplated hereby, at law or in equity, or before
any arbitrator of any kind, or before or by any court or
governmental or regulatory authority, domestic or foreign, and
such Vendor is not aware of any existing ground on which any such
claim, action, suit, investigation or proceeding might be
commenced with any reasonable likelihood of success; (ii) there
are no injunctions (permanent or temporary, whether by order,
judgment or decree of any court or governmental agency, authority
or body) against the Vendors or any officer, director or employee
of any Vendor enjoining any Vendor or any officer, director or
employee from engaging in or continuing any conduct or practice
in connection with the business, assets or properties of the
Robeez Group; (iii) there is no order, judgment or decree of any
court, tribunal or agency enjoining or requiring the Vendors to
take any action of any kind with respect to the business, assets
or properties of the Robeez Group; and (iv) to the best of such
Vendor's knowledge, there has not been any occurrence or event
upon which an action, suit or proceeding may be, but has not yet
been, based or upon which a claim may be, but has not yet been,
made.
(g) No Other Purchase Agreements -- No person, other than the Purchaser,
has any agreement, option or commitment or any right or privilege
(whether by law, pre-emptive or contractual), capable of becoming
an agreement, option or commitment for the acquisition from such
Vendor of any or all of the Purchased Shares, or any interest
therein or right thereto, except the Purchaser pursuant to this
Agreement, and no person has any right of first refusal or any
pre-emptive right in connection with the sale and purchase of the
Purchased Shares, other than as has been waived, with respect to
the transactions provided for herein.
(h) Shareholdings of the Vendors -- Such Vendor is the sole beneficial
and registered owner of the Purchased Shares set forth opposite his,
her or its name in Schedule 3.2(h), with good and marketable
title thereto, free and clear of all Encumbrances and, without
limiting the generality of the foregoing, none of the Purchased
Shares owned by such Vendor is subject to any voting trust,
shareholder agreement or voting agreement other than the
Shareholders Agreement.
(i) Ownership by Purchaser -- Upon completion of the transactions
contemplated by this Agreement, all of the Purchased Shares owned by
such Vendor will be transferred and delivered to the Purchaser free
and clear of any and all Encumbrances.
(j) No Conflicting Interests -- The execution, delivery and performance
by such Vendor of this Agreement and of each and every agreement or
document to be executed and delivered hereunder by such Vendor or
any member of the Robeez Group, and the consummation of the
transactions contemplated herein and therein, will not, with or
without the passage of time or the giving of notice or both,
violate, conflict with, result in a breach of, constitute a
default, or cause the acceleration of any obligation of such
Vendor, under:
(i) any agreement, instrument, licence, permit or authority to
which such Vendor is, or is entitled to be, a party or to which
any or all of his or her Purchased Shares are subject;
(ii) any provision of the memorandum, articles, bylaws or
resolutions of the board of directors (or any committee
thereof) or shareholders of such Vendor, if such Vendor is a
corporation;
(iii) any provision of the trust declaration, indenture, deed or
agreement of the such Vendor, if such Vendor is a trust;
(iv) any judgment, decree, order, statute, rule or regulation
applicable to such Vendor; or
(v) any provision of law or regulation of any governmental or
regulatory authority or any judicial or administrative order,
award, judgment or decree applicable to such Vendor.
(k) Absence of Approvals Required -- Relying upon the Purchaser's
representation and warranty with respect to the Investment Canada
Act (Canada) set forth in Section 4.2(h), no authorization,
approval, order, licence, permit or consent of any governmental
authority of Canada, any province of Canada, any municipal,
regional, or other authority, regulatory body or agency,
including any governmental department, commission, bureau, board
or administrative agency or court, and no registration,
declaration or filing by the Vendors or the Robeez Group with any
such governmental authority, regulatory body or agency or court
is required in order for the Vendors:
(i) to consummate the transactions contemplated by this Agreement;
(ii) to execute and deliver all of the documents and instruments to
be delivered by the Vendors under this Agreement;
(iii) to duly perform and observe the terms and provisions of this
Agreement; and
(iv) to render this Agreement legal, valid, binding and
enforceable.
(l) Residency -- Such Vendor is not a non-resident of Canada for the
purposes of the Tax Act.
3.3 Representations and Warranties Relating to the Robeez Group
Each of the Vendors jointly and severally represents and warrants to
the Purchaser as follows:
(a) Organization -- Each member of the Robeez Group is duly organized
and is a valid and subsisting corporation in good standing under the
laws of their respective governing jurisdictions.
(b) Power and Authority -- Each member of the Robeez Group has all
necessary power, authority and capacity, and all governmental
licenses, authorizations, consents and approvals required, to
enter into and to perform its obligations under any agreement
contemplated herein, to own, lease, licence or otherwise hold, as
applicable, its assets and to carry on its business as presently
conducted and is validly registered wherever necessary under the
federal and provincial laws of Canada, and the laws of any
other jurisdiction in which the failure to be so registered would
have a Material Adverse Effect.
(c) Action -- At the Closing Time, the Robeez Group will have taken all
necessary actions, steps and proceedings to approve or authorize,
validly and effectively, the sale and transfer of the Purchased
Shares to the Purchaser.
(d) Binding Effect of Other Agreements -- At the Closing Time, each
agreement contemplated to be executed and delivered hereunder by
any member of the Robeez Group at or before the Closing Time will
have been duly executed and delivered and shall constitute a
legal, valid and binding obligation of such entity, enforceable
in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency and other laws affecting the
rights of creditors generally and except that equitable remedies
may be granted only in the discretion of a court of competent
jurisdiction. The execution, delivery and performance by any
member of the Robeez Group of each agreement contemplated to be
executed and delivered hereunder by any member of the Robeez
Group at or before the Closing Time, and the consummation by any
member of the Robeez Group of the transactions contemplated
thereby, are within such member's corporate powers.
(e) No Conflicting Interests -- The execution, delivery and performance
by the Vendors and any member of the Robeez Group of this Agreement
and the execution, delivery and performance by the Vendors and
any member of the Robeez Group of each and every agreement or
document to be executed and delivered hereunder and the
consummation of the transactions contemplated herein by such
parties will not, with or without the passage of time or the
giving of notice or both, violate, conflict with, result in a
breach of, constitute a default, or cause the acceleration of any
obligation of any of the Vendors or any member of the Robeez
Group, under:
(i) any agreement, instrument, licence, permit or authority to
which any such party is, or is entitled to be, a party;
(ii) any provision of the memorandum, articles, bylaws or
resolutions of the board of directors (or any committee
thereof) or shareholders of any such party, if applicable;
(iii) any judgment, decree, order, statute, rule or regulation
applicable to any such party; or
(iv) any provision of law or regulation of any governmental or
regulatory authority or any judicial or administrative
order, award, judgment or decree applicable to any such
party.
(f) Regulatory Approvals to Transactions -- No permits, licences,
certifications, authorizations, approvals, consents,
orders-in-council, legislation or other action of any court or
governmental or other regulatory authority or agency are required
in any jurisdiction by or with respect to any member of the
Robeez Group for the completion of the transactions contemplated
herein or for the execution, delivery or performance by such
member of any agreement contemplated hereunder or the
transactions contemplated therein to be delivered by such member
at or before the Closing Time.
(g) Share Capital of the Robeez Group -- The designated, authorized and
issued share capital of each class of capital stock of each
member of the Robeez Group is as set forth in Schedule 3.3(g).
Schedule 3.3(g) contains a list of all holders of capital stock
or rights to acquire capital stock of any member of the Robeez
Group. All outstanding shares of capital stock of each member of
the Robeez Group have been duly authorized and validly issued,
are fully paid and nonassessable.
(h) No Other Shares -- No member of the Robeez Group owns, beneficially
or otherwise, any shares or other equity interest in any other
entity, other than in another member of the Robeez Group, and
does not hold any securities or obligations of any kind
convertible into or exchangeable for shares or other equity
interest in any other entity. No member of the Robeez Group is a
party to any agreement to acquire any shares or other equity
interest in any other entity.
(i) Options or Convertible Securities -- Except as disclosed in
Schedule 3.3(g), no person, other than the Purchaser under this
Agreement, has any agreement, option, commitment, or any right or
privilege (whether by law, pre-emptive or contractual) capable of
becoming an agreement, option or commitment (including any such
right or privilege under convertible securities, warrants or
convertible obligations of any nature) for:
(i) the purchase, subscription, allotment or issuance of, or
conversion into, any shares or other securities of any
member of the Robeez Group;
(ii) the purchase or other acquisition from the Robeez Group of
any of its undertakings, businesses or assets, including
the Business, other than the sale of inventory in the
ordinary course of business; or
(iii) the repurchase, redemption or other acquisition of any
shares or other securities of any member of the Robeez
Group.
(j) Partnerships or Joint Ventures -- Other than pursuant to the
Material Contracts set out in the Disclosure Schedules, no member
of the Robeez Group is a partner or participant in any
partnership, joint venture, profit-sharing arrangement or other
business combination of any kind and is not party to any agreement
under which such member of the Robeez Group agrees to carry on any
part of its business or any other activity in such a manner or by
which such member agrees to share any revenue or profit with any
other person.
(k) Books and Records -- The books and records of the Robeez Group are
accurate and complete in all material respects, have been
maintained in accordance with good business and bookkeeping
practices, and fairly and correctly present, as at the date
hereof, the financial position of each member of the Robeez
Group, respectively. All assets and undertakings, all material
liabilities, including contingent liabilities and shareholders'
accounts, and all material financial transactions of each member
of the Robeez Group, have been accurately recorded in such books
and records. Since the date of the Interim Financial Statements
the system of internal accounting controls maintained by the
Robeez Group (i) has not been changed, (ii) has been sufficient
to provide reasonable assurance that transactions are executed
and access to assets is permitted only in accordance with
management's authorization, and (iii) has operated in the
ordinary course consistently with prior periods and in such a
manner as to provide reasonable assurance that the Closing
Balance Sheet, the Closing Working Capital Statement and full
financial statements as of August 31, 2006 comparable to the
Audited Financial Statements and presenting fairly, in all
material respects, the financial position of the Robeez Group as
of such date and the results of operations and cash flows of the
Robeez Group for the period then ended can be prepared in
accordance with GAAP applied on a consistent basis with that of
prior periods and on a basis consistent with the Audited
Financial Statements.
(l) Material Contracts -- Other than the Leases and the Material
Contracts, no member of the Robeez Group is a party to or
bound by any Contract, other than:
(i) any continuing agreement for the purchase of materials,
supplies, equipment or services involving annual
expenditures of not more than $50,000 individually or
$100,000 in the aggregate in respect of any such agreement;
(ii) any agreement for the borrowing of money or a leasing
transaction of the type required to be capitalized in
accordance with GAAP and requiring an annual payment of not
more than $50,000 individually or $100,000 in the aggregate
in respect of any such agreement;
(iii) any agreement for capital expenditures not in excess of
$50,000 in respect of any such agreement;
(iv) any agreement for the sale of inventory in the ordinary
course of business; or
(v) any agreement pursuant to which the Robeez Group is a lessee
or lessor of any machinery, equipment, motor vehicles,
office furniture, fixtures or other personal property that
requires an annual payment of not more than $50,000
individually or $100,000 in the aggregate in respect of any
such agreement.
The Robeez Group has made available to the Purchaser or its
representatives accurate and complete copies of each of the
agreements listed on Schedule 3.3(l).
Except as set forth in Schedule 3.3(l), each Material Contract is in
full force and effect and is valid, binding and enforceable by the
Robeez Group in accordance with its terms. Except as set forth in
Schedule 3.3(l), none of the members of the Robeez Group is in
default in the observance or performance of any material term or
obligation to be performed by any of them under any Material
Contract. To the best of the Vendors' knowledge, no other person is
in default in the observance or the performance of any term or
obligation to be performed by it under any Material Contract.
Neither the Vendors nor any member of the Robeez Group has received
notice of any alleged default or breach in respect of any Material
Contract.
(m) Third Party Consents -- Except as disclosed in Schedule 3.3(m), no
consent, approval, waiver or other action by any person (other
than any governmental body, agency, official or authority
referred to in Section 3.3(f) above) under any Material Contract
is required or necessary for the execution, delivery and
performance by the Vendors or the Robeez Group, as applicable, of
this Agreement or any agreement contemplated hereunder or in
respect the consummation of the transactions contemplated herein
or therein.
(n) Historical Financial Statements
(i) The Audited Financial Statements have been prepared in
accordance with GAAP, on a basis consistent with that of
previous years and are correct and complete. The balance
sheet (including the related notes) included in the Audited
Financial Statements present fairly in all material respects
the financial position of the Robeez Group as of the
respective dates thereof, and the other related statements
(including the related notes) included in the Audited
Financial Statements present fairly in all material respects
the results of operations and cash flows of the Robeez Group
for the respective periods or as of the respective dates set
forth therein.
(ii) Except for normally recurring year-end adjustments, which
adjustments will not be material either individually or in the
aggregate to the Robeez Group, and the absence of any notes to
the Interim Financial Statements, (i) the consolidated balance
sheet included in the Interim Financial Statements presents
fairly, in all material respects, the financial position of
the Robeez Group as of June 30, 2006; (ii) the other related
statements included in the Interim Financial Statements
present fairly in all material respects the results of
operations and cash flows of the Robeez Group for the period
ended June 30, 2006; and (iii) each of the balance sheet and
the statement of income included in the Interim Financial
Statements has been prepared in all material respects in
accordance with GAAP applied on a consistent basis during the
period involved and on a basis consistent with the Audited
Financial Statements, except as otherwise noted therein.
(iii) No member of the Robeez Group has, as of the date of this
Agreement, any material liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any
type, whether accrued absolute, contingent, matured, unmatured
or otherwise (whether or not required to be reflected in
financial statements in accordance with GAAP), which
individually or in the aggregate has not been reflected in the
Historical Financial Statements, other than as has been
incurred since June 30, 2006 in the ordinary and usual course
of its business.
(o) Minute Books -- The records and minute books of each member of
the Robeez Group contain complete and accurate minutes of all
meetings and resolutions of the directors (and any committees
thereof) and shareholders of each member of the Robeez Group,
and the central securities register or shareholders registers
and the register of directors of each member of the Robeez
Group are complete and accurate in all material respects.
(p) No Changes -- Except as set out in Schedule 3.3(p) or
otherwise disclosed in this Agreement including, without
limitation, the Disclosure Schedules, the Business has been
carried on in the normal and ordinary course since August 31,
2005 and there has not been, occurred or arisen any:
(i) acquisition or capital expenditure in excess of $100,000, in
the aggregate;
(ii) destruction of, damage to or loss of any tangible assets
(whether or not covered by insurance) in excess of $25,000;
(iii) labour trouble or claim of wrongful discharge or other
unlawful labour practice or action;
(iv) change in tax or accounting methods, practices or elections
(including any change in depreciation or amortization,
policies or rates);
(v) revaluation for accounting purposes of any of the assets;
(vi) any tax election to settle or compromise any tax liability
material to the Robeez Group;
(vii) declaration, setting aside or payment of a dividend or other
distribution with respect to the Purchased Shares, or the
issued and outstanding equity securities of the Robeez Group,
or any direct or indirect redemption, purchase or other
acquisition by the Robeez Group of any of its equity
securities;
(viii)acquisition, sale, lease, licence or transfer of any assets,
except in the ordinary course of business;
(ix) amendment or termination of any material contract, agreement
or licence, except such amendments or terminations as may have
been made in the ordinary course of business, and on a
reasonable commercial basis;
(x) loan by any member of the Robeez Group to any person or entity
or the incurrence, assumption or guarantee by the Robeez Group
of any indebtedness for borrowed money;
(xi) waiver or release of any right or claim, including any
write-off or other compromise of any account receivable in
excess of $25,000;
(xii) commencement or notice or threat of commencement of any
lawsuit or proceeding against or investigation involving any
member of the Robeez Group or their respective affairs other
than as disclosed in Schedule 3.3(hh);
(xiii)notice of any claim of ownership by a third party of any of
the Intellectual Property or of infringement by any member of
the Robeez Group of any third party's intellectual property
rights other than as disclosed in Schedule 3.3(hh);
(xiv) amendment to the articles of incorporation, by-laws or other
constating documents of any of the Vendors or any members of
the Robeez Group that is a corporation;
(xv) issuance or sale by any member of the Robeez Group of any
shares of any class of their respective capital or of any
securities exchangeable, convertible or exercisable therefor,
or of any other of their respective securities;
(xvi) other than in the ordinary course of business and consistent
with past practice: (A) grant of any severance or termination
pay to any director, officer or senior management employee of
the Robeez Group, (B) entering into of any employment,
deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director,
officer or senior management employee of the Robeez Group, (C)
change in benefits payable under existing severance or
termination pay policies of the Robeez Group or employment
agreements to which the Robeez Group is a party, or (D) change
in compensation, bonus or other benefits payable to directors,
officers or senior management employees of the Robeez Group;
(xvii)Material Adverse Effect or any occurrence, change, or
circumstance of any character that has or could be reasonably
expected to have a Material Adverse Effect, individually or in
the aggregate, on the Robeez Group or the Business;
(xviii) agreement, undertaking or commitment to do any of the
foregoing.
(q) Accounts Receivable -- The accounts receivable of the Robeez Group
have been created in the course of bona fide sales of inventory in
the ordinary course of business and are valid, enforceable and fully
collectible in the face value thereof on normal commercial terms,
using normal collection procedures, net of the reserve for doubtful
accounts set forth on the Audited Financial Statements, which
reserve is adequate and was calculated in accordance with GAAP.
Nothing set forth in this subsection (q) shall constitute a
guarantee of collection by the Purchaser or the Robeez Group.
(r) Indebtedness -- Except as disclosed in the Historical
Financial Statements or otherwise disclosed in the Disclosure
Schedules or this Agreement, the Robeez Group does not have
outstanding, and are under no obligation to create or issue,
any bonds, debentures, mortgages, promissory notes or other
indebtedness.
(s) Taxes
(i) Each member of the Robeez Group has properly filed all
reports, returns and other filings respecting Taxes, of every
nature and kind which are required to be filed by them, on or
before the dates due, and all information and data in
connection therewith required to be filed by it with any
taxing or regulatory authority to which any member of the
Robeez Group or the Business is subject and all such reports,
returns, information and data are true, complete and
correct in all material respects.
(ii) The Robeez Group has paid all Taxes that are due and payable,
or claimed to be due, and any interest, penalties and fines in
connection therewith, properly due and payable, and has paid
all of same in connection with all assessments, reassessments
and adjustments, required to be paid by the Robeez Group
(whether or not shown on any Tax Return) through the date
hereof whether disputed or not, except Taxes which have not
yet accrued or otherwise become due.
(iii) Except as disclosed in Schedule 3.3(s), the Historical
Financial Statements or otherwise disclosed in this Agreement,
including, without limitation, the Disclosure Schedules, other
than Taxes incurred in the ordinary course of business since
June 30, 2006 and not yet due, no other Taxes have been
claimed by any governmental or regulatory authority or are due
and owing by any member of the Robeez Group or, by reason of
the transactions herein contemplated, will become due and
owing by any member of the Robeez Group, and there are no
matters of dispute or under discussion with any governmental
or regulatory authority relating to Taxes asserted by such
authority.
(iv) No member of the Robeez Group is liable for any Taxes of a
third party.
(v) Each member of the Robeez Group has withheld all amounts
required to be withheld including, without limiting the
generality of the foregoing, all amounts required to be
withheld under the Tax Act, for employee deductions,
employment insurance, the Canada Pension Plan and any other
amounts required by the laws of any jurisdiction in which the
Robeez Group operates to be withheld from any payments made to
non-residents and any of its officers, directors, employees,
consultants and agents, and has duly paid the same to the
proper taxing authority or receiving offices within the time
periods required by law.
(vi) There are no agreements, waivers (including a waiver in
respect of time within which a reassessment may be made by any
taxing authority) or other arrangements providing for any
extension of time with respect to the filing of any tax return
by, or payment of any Tax, governmental charge or deficiency
against, any member of the Robeez Group.
(vii) There are no actions, suits, proceedings, investigations,
audits or claims pending or, to the best of the Vendors'
knowledge, threatened against any member of the Robeez Group
in respect of Taxes, governmental charges, assessments,
reassessments or any other matters under discussion with any
governmental or regulatory authority relating to taxes,
charges or assessments asserted by any such governmental or
regulatory authority.
(viii)No member of the Robeez Group, other than Robeez International
Holdings Ltd., Robeez Holdings Ltd., Robeez US Holdings Ltd.
and Robeez Footwear Ltd., is resident in Canada for the
purposes of the Tax Act.
(ix) None of sections 17 (dealing with low-interest loans to or
investments in foreign corporations) or 78 to 80.04 (dealing
with unpaid amounts, debt forgiveness or foreclosure) of the
Tax Act have applied or will apply in respect of any period
prior to closing.
(x) The reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the
Historical Financial Statements (rather than in any notes
thereto) is sufficient as of its date for the payment of
any accrued and unpaid Taxes of the Robeez Group and since
the date of the Historical Financial Statements the Robeez
Group has not incurred Taxes other than in the ordinary
course of its business.
(xi) Each Selling Company has in a timely manner documented its
transfer pricing methodology in compliance with, and any
transfer prices set pursuant to such methodology comply with,
the Tax Act.
(t) U.S. Taxes
(i) Each U.S. entity that is a member of the Robeez Group (for
purposes of this Section 3.3(t), each a "Selling Company") has
timely and properly filed all U.S. federal, state, local and
foreign Tax Returns required to be filed, and all such Tax
Returns filed by each Selling Company are true, correct and
complete in all material respects.
(ii) Each Selling Company has paid or caused to be paid all Taxes,
required to be paid by it (whether or not shown on any Tax
Return) through the date hereof whether disputed or not,
except Taxes which have not yet accrued or otherwise become
due.
(iii) No Selling Company is a party to any contract, agreement, plan
or arrangement covering any employee or former employee
thereof, that, individually or collectively, could give rise
to the payment of any amount that would not be deductible
pursuant to Section 280G or Section 162 of the Code.
(iv) No Selling Company has ever been (i) a passive foreign
investment company, (ii) a foreign personal holding company,
(iii) a foreign sales corporation, (iv) a foreign investment
company or (v) a Person other than a United States person,
each within the meaning of the Code.
(v) The reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the
Historical Financial Statements (rather than in any notes
thereto) is sufficient as of its date for the payment of
any accrued and unpaid Taxes of any Selling Company and
since the date of the Historical Financial Statements no
Selling Company has incurred Taxes other than in the
ordinary course of its business.
(vi) There are no liens for Taxes (other than Taxes not yet due and
payable) upon any of the assets of any Selling Company. Each
Selling Company has delivered to the Purchaser correct and
complete copies of all annual Tax Returns, examination
reports, and statements of deficiencies filed by, assessed
against, or agreed to by such Selling Company for any taxable
period ending after December 31, 1999 and indicates those Tax
Returns that are currently the subject of an audit.
(vii) No Selling Company has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with
respect to any Tax payment, assessment, deficiency, collection
or filing.
(viii)Except as set forth in Schedule 3.3(s): (i) no Selling Company
has received written notice of any audit or of any proposed
deficiencies from the U.S. Internal Revenue Service (the
"IRS") or any other taxing authority; (ii) there are in
effect no waivers of applicable statutes of limitations
with respect to any Taxes owed by any Selling Company for
any year; (iii) neither the IRS nor any other taxing
authority is now asserting or threatening in writing to
assert against any Selling Company any deficiency or claim
for additional Taxes or interest thereon or penalties in
connection therewith; (iv) no Selling Company has been a
member of an affiliated group of corporations within the
meaning of Section 1504(a) of the Code filing a combined
federal income Tax Return nor does any Selling Company have
any liability for Taxes of any other Person under Treasury
Regulations ss. 1.1502-6 (or any similar provision of
foreign, state or local law), as a transferee or successor,
by contract or otherwise; and (v) no Selling Company has
filed a consent under Section 341(f) of the Code,
concerning collapsible corporations.
(ix) No Selling Company has been a United States real property
holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. No Selling Company has made an
election under Code Section 897(i) to be treated as a domestic
corporation for purposes of Code Sections 897, 1445 or 6039C.
(x) No Selling Company is a party to any Tax allocation or sharing
arrangement.
(xi) No Selling Company will be required to include any item of
income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending
after the Closing Date as a result of any (i) "closing
agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign
income Tax law) executed on or prior to the Closing Date; (ii)
intercompany transactions or any excess loss account
described in Treasury Regulations under Section 1502 of the
Code (or any corresponding or similar provision of state,
local or foreign income Tax law); (iii) installment sale or
open transaction disposition made on or prior to the Closing
Date; or (iv) prepaid amount received on or prior to the
Closing Date.
(xii) Each Selling Company has withheld and paid all material Taxes
required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and all forms or
Tax Returns required with respect thereto have been properly
completed and timely filed.
(xiii)No Selling Company will be required to include any adjustment
under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income
for any Tax period ending after the Closing Date as a result
of a change in accounting method for a Tax period beginning on
or before the Closing Date.
(xiv) No Selling Company has distributed stock of another entity, or
has had its stock distributed by another entity, in a
transaction that was purported or intended to be governed in
whole or in part by Section 355 or 361 of the Code.
(xv) No Selling Company has engaged in any "reportable transaction"
for purposes of Treasury Regulations Section 1.6011-4(b) or
Code Section 6111 or any analogous provision of state or local
law. Each Selling Company has disclosed on its federal income
Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within
the meaning of Code Section 6662.
(xvi) Each Selling Company has provided Purchaser with copies of all
private letter rulings, determination letters, closing
agreements and other correspondence issued by or received from
the IRS or any other governmental authority with respect to
Tax matters.
(xvii)With respect to each member of the Robeez Group, Schedule
3.3(s) sets forth (i) the U.S. federal entity tax
classification pursuant to Treasury Regulations Section
301.7701-3 and (ii) each "check-the-box" election made
pursuant to Treasury Regulations Section 301.7701-3 for any
member of the Robeez Group.
(xviii)Each Selling Company has in a timely manner documented its
transfer pricing methodology in compliance with, and any
transfer prices set pursuant to such methodology comply
with, Code Sections 482, 6662(e) and 6662(h) (and any
related sections of the Code), the Treasury Regulations
promulgated thereunder (including without limitation the
principal transfer pricing documentation requirements set
forth in Treasury Regulation 1.6662-6) and any comparable
provisions of U.S. state, local, domestic or foreign Tax
law.
(u) GST -- With respect to the goods and services tax ("GST") under the
Excise Tax Act (Canada):
(i) Robeez Footwear is registered for GST purposes under
registration number 89691 5857 RT0001 and has a monthly
reporting period, and no other member of the Robeez Group is
required to be registered for GST purposes;
(ii) no member of the Robeez Group has any deferred obligations or
liabilities under any section of the Excise Tax Act;
(iii) all GST and other excise, sales or value-added taxes, levies
or duties required to be collected by the Robeez Group has
been collected and remitted to the applicable taxation
authority within the time and in the manner required by
applicable law; and
(iv) all GST returns and reports of the Robeez Group required by
law to be filed have been filed in a timely manner and are
true, complete and correct in all respects.
(v) Employee Commitments
(i) Schedule 3.3(v) accurately sets forth, for all of the
employees of the Robeez Group whose annual rate of base
compensation exceeds $75,000 per year, the names, duration
of service, department, title, salary and the general terms of
remuneration and benefits as of June 30, 2006 and a
description of any severance amounts directly payable by
the Robeez Group if the transactions contemplated by this
Agreement are consummated.
(ii) Except as set forth in Schedule 3.3(v) or otherwise disclosed
in this Agreement including, without limitation, the
Disclosure Schedules, no member of the Robeez Group is a party
to or bound by:
(A) any written or oral employment, service, pension,
employee benefit agreement or collective bargaining
agreement or other agreement with or respecting its
employees or bound by or obligated to make any
contributions under any pension plan or arrangement or
any retirement income plan, deferred profit sharing plan
or similar plan or arrangement, or any plan, program or
other arrangement providing for medical services or
coverage, dental care and life insurance; or
(B) any agreements or arrangements that contain any severance
pay or post-employment liabilities or obligations; or
(C) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or
salesperson or consulting or sales agreement, contract or
commitment with a firm or other organization; or
(D) any agreement or plan established for the benefit of
employees or former employees of the Robeez Group (an
"Employee Plan"), including, without limitation, any
pension plan, profit sharing plan, stock option plan,
stock appreciation rights plan or stock purchase plan.
(iii) No member of the Robeez Group is in arrears in the payment of
any contribution or assessment required to be made pursuant to
any of the agreements, arrangements or plans set forth in
Schedule 3.3(v), and the assets of each Employee Plan are at
least equal to the liabilities of such Employee Plan or are
fully provided for in the Historical Financial Statements.
Each Employee Plan has been administered in all material
respects in accordance with its terms and all applicable law.
The Robeez Group has reserved the right to terminate each
Employee Plan without liability for future accrual.
(iv) There are no existing or, to the best of the Vendors'
knowledge, threatened labour strikes or labour disputes,
grievances, controversies or other labour troubles affecting
any member of the Robeez Group.
(v) Each member of the Robeez Group has complied with all laws,
rules, regulations and orders applicable to it relating to
employment, including those relating to wages, hours,
collective bargaining, occupational health and safety,
workers' hazardous materials, employment standards, human
rights, pay equity and workers' compensation.
(vi) There are no outstanding charges or complaints against any
member of the Robeez Group relating to unfair labour practices
or discrimination or under any legislation relating to
employees.
(vii) Each member of the Robeez Group has paid in full all amounts
owing under legislation relating to workers' compensation and
workers' compensation claims.
(viii)All accruals for unpaid vacation pay, premiums for employment
insurance, health premiums, Canada Pension Plan premiums,
accrued wages, salaries and commissions and Employee Plan
payments have been reflected in the Historical Financial
Statements other than those accruing in respect of the period
after June 30, 2006 and which are accurately reflected in the
books and records of the Robeez Group.
(ix) No member of the Robeez Group has made any agreements with any
labour union or employee association nor made commitments to
or conducted negotiations with any labour union or employee
association with respect to any future agreements and none of
the Vendors is aware of any current attempts to organize or
establish any labour union or employee association in any
member of the Robeez Group. No trade union, council of trade
unions, employee bargaining agency or affiliated bargaining
agent holds bargaining rights with respect to any employees of
the Robeez Group by way of certification, interim
certification, voluntary recognition, designation or
successors' rights, or has applied to be certified as a
bargaining agent for any employees of the Robeez Group.
(x) Except as set forth in Schedule 3.3(v), no employee or
independent contractor of any member of the Robeez Group is on
short-term or long-term disability benefits or to the
knowledge of the Vendors in the process of applying for
short-term or long-term disability benefits.
(w) Real Property -- Except for the Leases set forth in Schedule 3.3(x),
no member of the Robeez Group owns or has any right, title or
interest in any real property and none of them has agreed to acquire
any real property or interest therein.
(x) Leases and Leased Property
(i) No member of the Robeez Group is a party to or bound by or
subject to, nor agreed or become bound to, enter into any real
or personal property lease or other right of occupancy
relating to real property, whether as lessor or lessee,
except for the Leases set forth and described, in
Schedule 3.3(x) or otherwise disclosed in this Agreement,
including, without limitation, the Disclosure Schedules.
The Vendors have delivered to the Purchaser correct and
complete copies of the leases and subleases (as amended to
date) listed in Schedule 3.3(x).
(ii) Each Lease is legal, valid, binding, enforceable against the
parties thereto, in full force and effect and in good
standing.
(iii) There does not exist under each Lease any default by any
member of the Robeez Group or, to the best of the Vendors'
knowledge, by any other person, or any event that, with notice
or lapse of time or both, would constitute a default by any
member of the Robeez Group or, to the best of the Vendors'
knowledge, by any other person. All rent and other charges
currently due and payable under the Leases by any member of
the Robeez Group have been paid.
(iv) There are no disputes, oral agreements or forbearance programs
in effect as to each Lease.
(v) Each Lease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following
the Effective Time in accordance with the terms thereof as in
effect prior to the Effective Time, subject to the receipt of
the necessary consent of the landlord to the change in control
of the Robeez Group.
(vi) Neither the Vendors nor any member of the Robeez Group has
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in any Lease.
(vii) All facilities leased under each of the Leases are
structurally sound and in good condition, and supplied with
utilities and other services necessary for the operation of
said facilities.
(viii) No member of the Robeez Group nor any other party thereto is
in breach of any of the provisions of any Lease and (subject
to obtaining any consents, approvals, permits and
acknowledgements required thereunder to the change in
control of the Robeez Group herein contemplated and listed
on Schedule 3.3(x)) the completion of the transactions
herein contemplated will not afford any of the parties to
any Lease or any other person the right to terminate any
Lease nor will the completion of the transactions herein
contemplated result in any additional or more onerous
obligation on any member of the Robeez Group under any
Lease.
(y) Business -- The Business is the only business operation carried on
by the Robeez Group and all of the assets used therein are in good
operating condition and in a state of good repair and
maintenance, reasonable wear and tear excepted. Except as
disclosed in Schedule 1.1(tt) or otherwise disclosed in this
Agreement, including, without limitation, the Disclosure
Schedules, Robeez Footwear owns or leases all of the assets,
which assets comprise all of the property and assets used in, or
necessary for the conduct of, the Business as currently being
conducted, with good and marketable title thereto, free and clear
of any and all Encumbrances except Permitted Encumbrances or
Encumbrances to be discharged by the Vendors at Closing.
(z) Insurance -- Schedule 3.3(z) is a list of all insurance policies
(including the name of the insurer, policy number, type of
insurance, expiry date and details of pending claims) maintained
by the Robeez Group. Such policies of insurance are of the type
and in amounts customarily carried by persons conducting
businesses similar to those of the Robeez Group. The Robeez
Group and the Vendors do not know of any threatened termination
of, or premium increase with respect to, any of such policies.
Except as set forth in Schedule 3.3(z), (i) each such insurance
policy is enforceable and in full force and effect and has been
in full force and effect (or policies containing substantially
similar insurance coverage have been in full force and effect)
since January 1, 2003; (ii) each such policy will continue to be
enforceable and in full force and effect immediately following
the Closing Date; (iii) neither the Vendors nor any member of the
Robeez Group is in material breach or default (including the
payment of premiums or the giving of notices) under any such
policy, including events which would be a material breach or
default with notice or the lapse of time, or which would permit
termination, modification or acceleration, under such policy;
(iv) neither the Vendors nor any member of the Robeez Group has
received any notice from any insurer disclaiming coverage or
reserving rights with respect to a particular claim or a
particular policy in general. Schedule 3.3(z) contains a list of
all claims made under any such insurance policies of the Vendors
or any member of the Robeez Group from January 1, 2004 throughout
the date hereof. Except as set forth in Schedule 3.3(z), no
member of the Robeez Group has any insurance claims outstanding.
(aa) Banking Arrangements -- Schedule 3.3(aa) contains a true and
complete list showing:
(i) the name of each bank, trust company or similar institution in
which any member of the Robeez Group has accounts or safe
deposit boxes and the names of all persons authorized to draw
thereon or to have access thereto; and
(ii) the name of each person holding a general or special power of
attorney from any member of the Robeez Group and a summary of
the terms thereof in respect of such bank accounts.
(bb) Directors and Officers -- Schedule 3.3(bb) sets forth the names and
titles of all directors and officers of each member of the Robeez
Group immediately prior to the Closing Time.
(cc) Guarantees -- Except as set forth in the Historical Financial
Statements or otherwise disclosed in this Agreement, including,
without limitation, the Disclosure Schedules, no member of the
Robeez Group is a party to or bound by any agreement of guarantee,
indemnification, assumption or endorsement or any other like
commitment of the indebtedness of any other person or entity.
(dd) Intellectual Property --
(i) Schedule 3.3(dd) sets forth all patents, registered and
unregistered trademarks, registered copyrights, domain names
and applications for any of the foregoing owned by or licensed
to the Robeez Group that are material in the conduct of the
Business of the Robeez Group.
(ii) All registrations with and applications to Governmental or
Regulatory Authorities in respect of such Intellectual
Property owned by the Robeez Group are valid and in full force
and effect and are currently in compliance with formal legal
requirements (including, without limitation, the payment of
any taxes or maintenance fees), and no actions outside of the
ordinary course of business are required to maintain their
validity or effectiveness.
(iii) Except as set forth in Schedule 3.3(dd) or otherwise disclosed
in this Agreement, including, without limitation, the
Disclosure Schedules, no member of the Robeez Group has
transferred ownership of or granted any licence of or right to
use or authorize the retention of any rights to use any
Intellectual Property that is material in the conduct of the
Business, to any other person.
(iv) To the best of the Vendors' knowledge: (A) except as set forth
in Schedule 3.3(hh) or otherwise disclosed in this Agreement,
including, without limitation, the Disclosure Schedules, the
operation of the Business as currently conducted, including
the design, development, manufacture, marketing and sale of
the products of the Robeez Group has not and does not infringe
or misappropriate the intellectual property of any person, or
violate the rights of any person (including rights to privacy
or publicity); (B) except as set forth on Schedule 3.3(hh),
no member of the Robeez Group has received notice from any
person claiming that such operation or any act or product
(including products currently under development) of the Robeez
Group infringes or misappropriates the intellectual
property of any other person or constitutes unfair competition
or trade practices under the laws of any jurisdiction (nor to
the knowledge of the Vendors is there any basis therefor).
(v) Except as set forth in Schedule 3.3(dd) or otherwise disclosed
in this Agreement, including without limitation, the
Disclosure Schedules, to the best of the Vendors' knowledge:
(A) no person is infringing or misappropriating any
Intellectual Property, that would have a Material Adverse
Effect on the Business, taken as a whole; (B) there is no
interference, opposition, reissue, reexamination or other
proceeding of any nature pending or threatened, in which the
scope, validity and/or enforceability of any Intellectual
Property is being, has been or could reasonably be expected to
be contested or challenged.
(vi) Except as set forth in Schedule 3.3(dd) or otherwise disclosed
in this Agreement, including, without limitation, the
Disclosure Schedules, and to the best of the Vendors'
knowledge, no Intellectual Property or product, technology or
service of any member of the Robeez Group is subject to any
proceeding or outstanding decree, order, judgment, agreement
or stipulation that restricts in any manner the use, transfer
or licensing thereof by the Robeez Group or that affects the
validity, use or enforceability of Intellectual Property.
(vii) Except as set forth in Schedule 3.3(dd), no royalty or other
fee in respect of intellectual property, whether owned by any
member of the Robeez Group or any other person, is required to
be paid by any member of the Robeez Group to any other person,
nor (except as disclosed in the Material Contracts) are the
Vendors bound by any contract to indemnify, defend, hold
harmless or reimburse any other person with respect to any
intellectual property infringement, misappropriation or
similar claim. Except for moral rights which are not material
to the operation of the Business or the exercise of such
rights that would not have a Material Adverse Effect on the
Business, taken as a whole, no employee, consultant or
contractor of the Robeez Group has any claim, right (whether
or not currently exercisable) or interest to or in any
Intellectual Property. To the best of the Vendors' knowledge,
no employee or independent contractor of the Robeez Group is:
(A) bound by or otherwise subject to any contract restricting
him or her from performing his or her duties for the Robeez
Group; or (B) in breach of any contract with any former
employer or other person concerning intellectual property
rights or confidentiality;
(viii)Except as set forth in Schedule 3.3(dd), all present and
former consultants, subcontractors and other persons,
including without limitation employees, who have participated
in the development of the Intellectual Property are subject to
written agreements under which all rights to the
Intellectual Property created by them has been assigned to
the members of the Robeez Group, except to the extent that
the failure to obtain such agreements would not have a
Material Adverse Effect on the Business, taken as a whole.
(ee) Non-Arm's Length Transactions -- Except as set forth in Schedule
3.3(ee) or otherwise disclosed in this Agreement, including without
limitation, the Disclosure Schedules, no director, officer or
shareholder of the Robeez Group and no entity that is an Affiliate
or Associate of one or more of such persons:
(i) owns, directly or indirectly, any interest in or is an
officer, director, employee or consultant of, any person which
is, or is engaged in business as, a competitor of the Business
of any member of the Robeez Group or a lessor, lessee,
supplier, distributor, sales agent or customer of the Business
of any member of the Robeez Group;
(ii) owns, directly or indirectly, in whole or in part, any
property that any member of the Robeez Group uses in the
operation of the Business, other than the property leased to
the Robeez Group under the Leases;
(iii) except for employment and consulting contracts, is party to
any Contract with any member of the Robeez Group; or
(iv) has any cause of action or other claim whatsoever against the
Robeez Group in connection with the Business, except for any
liabilities reflected in the Historical Financial Statements
and claims in respect of salaries or other employment benefits
payable in the ordinary course.
(ff) Compliance with Covenants -- The Robeez Group has complied with,
performed, observed and satisfied all material covenants, terms,
conditions, obligations and liabilities required to be performed,
observed, and satisfied by it, whether express or implied, which
have arisen under the provisions of any of the Material Contracts
and each of such Contracts and other instruments is valid and
enforceable, each in accordance with its respective terms, and no
party to any of them is in default thereunder or in breach thereof
or would, with the giving of notice or the lapse of time or both, be
in breach or default in any material respect.
(gg) Compliance with Laws -- All laws, regulations, and orders of any
governmental or regulatory authority having jurisdiction over any
member of the Robeez Group or the Business are being, and have been,
complied with in all material respects by the Robeez Group, as
applicable.
(hh) Litigation and Related Matters -- Except as set forth in Schedule
3.3(hh), or otherwise disclosed in this Agreement, including without
limitation, the Disclosure Schedules, (i) there are no claims,
actions, suits, investigations or proceedings pending or, to the
best of the Vendors' knowledge, threatened, against or affecting the
Robeez Group or the Business, at law or in equity, or before any
arbitrator of any kind, or before or by any court or governmental or
regulatory authority, domestic or foreign, and to the best of the
Vendors' knowledge, there is no existing ground on which any such
claim, action, suit, investigation or proceeding might be commenced
with any reasonable likelihood of success; (ii) there are no
injunctions (permanent or temporary, whether by order, judgment or
decree of any court or governmental agency, authority or body)
against the Robeez Group or any officer, director or employee of any
member of the Robeez Group enjoining any such member or any officer,
director or employee of any such member from engaging in or
continuing any conduct or practice in connection with the Business,
assets or properties of the Robeez Group; and (iii) there is no
order, judgment or decree of any court, tribunal or agency enjoining
or requiring any member of the Robeez Group to take any action of
any kind with respect to the Business, assets or properties of the
Robeez Group.
(ii) Environmental -- Except as set forth in Schedule 3.3(ii):
(i) the Robeez Group has been and is in compliance with all
applicable federal, provincial, state, municipal or other
laws, statutes, ordinances, bylaws, regulations, policies,
orders, directives and decisions rendered by any governmental
or regulatory authority relating to the protection of the
environment, health, or safety matters (collectively, in this
Section, "environmental laws"), except for any non-compliance
that would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Business,
taken as a whole;
(ii) without limiting the generality of paragraph (i) above, each
member of the Robeez Group:
(A) has operated their respective assets and Business; and
(B) has received, handled, used, stored, treated, shipped and
disposed of all pollutants, contaminants, hazardous or
toxic substances or materials, petroleum or petroleum
products, controlled or dangerous substances or
wastes (collectively, in this Section,
"contaminants");
in compliance with all applicable environmental laws and all
Licenses (as defined in (ii) below) required or issued
pursuant to all applicable environmental laws, except for any
non-compliance that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Business, taken as a whole;
(iii) there are no orders, rulings, directives, consent decrees,
consent orders or settlement agreements issued or in effect,
or, to the best of the Vendors' knowledge, pending or
threatened against any member of the Robeez Group under or
pursuant to any environmental laws requiring any
investigation, remediation, cleanup, work, repairs,
construction or capital expenditures with respect to the
property or assets of any member of the Robeez Group or the
conduct of the Business, taken as a whole;
(iv) the Vendors have not released any contaminants and, to the
best of the Vendors' knowledge, except as set forth on
Schedule 3.3(ii), no contaminants are currently present at, on
or near, or have been released into the environment or
deposited, discharged, placed or disposed of at, on, from or
near, or are migrating to or from, any real property currently
owned, leased, occupied or controlled by any member of the
Robeez Group or any predecessor of any member of the
Robeez Group;
(v) no notice, correspondence or request for information with
respect to any of the matters referred to in paragraphs (i),
(ii), (iii) or (iv) above, including any alleged violations by
any member of the Robeez Group with respect thereto has
been received by any member of the Robeez Group, and no
writ, injunction, order or judgment is outstanding, and no
legal proceeding or investigation under or pursuant to any
environmental laws or relating to the Business is in
progress or, to the best of the Vendors' knowledge pending
or threatened, and to the best of the Vendors' knowledge,
there are no grounds on which any such legal proceeding
might be commenced with any reasonable likelihood of
success;
(vi) to the best of the Vendors' knowledge, there are no pending or
proposed changes in any environmental laws which would render
illegal any operations or activities of any member of the
Robeez Group or would otherwise adversely affect the conduct
of the Business by or impose material costs or liabilities
upon the Robeez Group;
(vii) to the best of the Vendors' knowledge, there are no
underground storage tanks on any real property currently
leased, occupied or controlled by any member of the Robeez
Group; and
(viii)the Vendors have provided to the Purchaser true and complete
copies of all reports, assessments, audits, investigations and
material correspondence with governmental or regulatory
authorities relating to environmental, health or safety
matters affecting the Business or the current or former
properties, assets or operations of any member of the Robeez
Group.
(jj) Operating Permits and Licences -- Schedule 3.3(jj) sets out a
complete and accurate list of all material licences, permits,
approvals, consents, certificates, registrations and authorizations
(whether governmental, regulatory or otherwise) (the "Licences")
held by or granted to each member of the Robeez Group. There are no
other licences, permits, approvals, consents, certificates,
registrations or authorizations necessary to carry on the Business
as presently conducted or to own or lease any of the property or
assets utilized by each member of the Robeez Group, except for
Licenses the absence of which would not have a Material Adverse
Effect, individually or in the aggregate, and except for Licenses
which would become required or necessary as a result of the business
or activities in which the Purchaser is or proposes to be engaged.
Each Licence is valid, subsisting and in good standing, and the
holder thereof is not in default or breach of any Licence and no
proceeding is pending or, to the best of the Vendors' knowledge,
threatened to revoke or limit any Licence.
(kk) No Business Restrictions -- Except as set forth in Schedule 3.3(kk)
or otherwise disclosed in this Agreement, including, but not limited
to, the Disclosure Schedules, there is no agreement (non-compete or
otherwise), commitment, judgment, injunction, order or decree to
which any member of the Robeez Group is party or which is otherwise
binding upon any member of the Robeez Group which has or reasonably
could be expected to have the effect of prohibiting or impairing any
business practice of any member of the Robeez Group, any acquisition
of property (tangible or intangible) by any member of the Robeez
Group or the conduct of business by any member of the Robeez Group.
(ll) Inventory -- All inventory of the Robeez Group, whether or not
reflected on the Audited Financial Statements or the Interim
Financial Statements, consists of a quality and quantity usable and
saleable in Robeez Group's ordinary course of business, except for
obsolete items and items of below-standard quality, all of which
have been written-off or written-down to net realizable value on the
Interim Financial Statements and except for inventory items having
an aggregate value not to exceed $25,000. All inventories not
written-off have been reflected on Robeez Group's books at the lower
of cost or net realizable value.
(mm) Customers and Suppliers -- No unfilled customer order or commitment
obligating any member of the Robeez Group to process, manufacture or
deliver products or perform services will result in a loss to the
Robeez Group upon completion of performance. No purchase order or
commitment of the Robeez Group is in excess of normal requirements,
nor are prices provided therein in excess of current market prices
for the products to be provided thereunder. No material supplier of
the Robeez Group has indicated within the past year that it will
stop, or decrease the rate of, supplying materials, products or
services to the Robeez Group, and no material customer of the Robeez
Group has indicated within the past year that it will stop, or
decrease the rate of, buying materials or products from it. Schedule
3.3(mm) sets forth a list of (i) each customer that purchased more
than 1,000 pairs of Robeez footwear during the last full fiscal year
and the period through the date of the Interim Financial Statements,
and (ii) each supplier of the Robeez Group that is the sole supplier
in the marketplace of any significant product or component to the
Robeez Group.
(nn) Products -- No goods or products (i) manufactured, sold or delivered
by the Robeez Group or (ii) manufactured, currently in inventory and
ready to be sold or delivered at the Closing Date have been or are
defective or in any way failed to comply with the terms of sale
thereof or, in the case of goods or products ready to be sold or
delivered at the Closing Date, would fail to comply with the terms
of sale similar to the terms of sale upon which similar goods or
products have been sold previously by the Robeez Group, so as to
give a cause of action against the Robeez Group pursuant to any
statutory provisions for the supply of goods with respect to which
the statute of limitations has not yet expired or for breach of
contract, negligence or otherwise. Each of the products produced or
sold by the Robeez Group (A) is, and at all times has been, in
compliance in all material respects with all applicable federal,
state, local and foreign laws and regulations and (B) is, and at all
relevant times has been, fit for the ordinary purposes for which it
is intended to be used and conforms in all material respects to any
promises or affirmations of fact made on the container, label or
documentation for such product or in connection with its sale. There
is no design defect with respect to any of such products and each of
such products contains adequate warnings, presented in a reasonably
prominent manner, in accordance with applicable laws and current
industry practice with respect to its contents and use.
(oo) Warranties and Indemnities -- Schedule 3.3(oo) sets forth the
standard written warranty given to purchasers of products sold or
supplied by the Robeez Group and all other written warranties given
by the Robeez Group for products sold or supplied by the Robeez
Group have been substantially similar to such warranty. There are no
pending or, to the best of the Vendors' knowledge, threatened
warranty or indemnity claims against any member of the Robeez Group
in excess of $25,000 in any individual case, or in excess of
$100,000 in the aggregate, and adequate reserves for all such claims
known to the Vendors are reflected in the Historical Financial
Statements.
(pp) Jurisdictions -- The Robeez Group conducts business only in the
jurisdictions set forth in Schedule 3.3(pp).
(qq) Finder's Fees -- Except as set forth on Schedule 3.3(qq), there is
no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of the Vendors or
the Robeez Group who might be entitled to any fee or commission from
the Purchaser, or any of its respective Affiliates upon consummation
of the transactions contemplated by this Agreement.
(rr) Copies of Agreements -- True, correct and complete copies of all
mortgages, leases, agreements, instruments, licences, permits,
authorizations and other documents listed in Schedules 1.1(tt),
3.3(l), 3.3(v), 3.3(x), 3.3(z), 3.3(dd), 3.3(jj), 3.3(kk) and
3.3(oo) have been delivered or made available by the Vendors to the
Purchaser.
(ss) Undisclosed Information -- None of the Vendors has any specific
information relating to the Robeez Group or the Business which is
not generally known or which has not been disclosed to the Purchaser
and which, if known, could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate, or on the value of
the Purchased Shares.
(tt) Disclosure -- No representation or warranty by the Vendors contained
in this Agreement, and no statement contained in the Disclosure
Schedules attached hereto or in any other document, certificate or
other instrument delivered to or to be delivered by or on behalf of
the Vendors pursuant to this Agreement, and no other statement made
by the Vendors or any of its representatives in connection with this
Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will
be made, in order to make the statements herein or therein not
misleading.
3.4 Nature and Survival of Representations and Warranties
Subject to Article 9 hereof, the representations and warranties of each of
the Vendors contained in this Agreement shall survive Closing in accordance with
the following provisions:
(a) the representations and warranties specifically contained in
Section 3.3(s) -- Taxes and Section 3.3(t) - U.S. Taxes shall
survive and continue in full force and effect for the period
commencing on the Closing Date and ending on the date on which
the last applicable limitation period (including extensions
thereof) under any applicable income tax or other tax legislation
expires with respect to any taxation year which is relevant in
determining any liability under this Agreement unless any of the
Vendors has been fraudulent or has made any misrepresentation
that is attributable to neglect, carelessness or wilful default
in filing a return or supplying information to any taxation
authority under any taxation legislation, in which case the
survival of those representations and warranties relating to such
tax matters shall be indefinite and provided the Robeez Group or
the Purchaser does not execute any waiver or similar document or
takes any action that extends such period without the prior
written consent of the Vendors;
(b) the representations and warranties set out in Section 3.2(h) -
Shareholdings of the Vendors and Section 3.2(i) - Ownership by
Purchaser hereof shall survive and continue in full force and effect
indefinitely;
(c) the representations and warranties set out in Section 3.2(a) -
Capacity, Section 3.2(b) -Duly Incorporated, Section 3.2(c) -
Duly Formed, Section 3.2(d) - Binding and Enforceable Agreement,
Section 3.2(e) - Binding Effect of Other Agreements,
Section 3.2(f) - Litigation and Related Matters; Section 3.3(a) -
Organization, Section 3.3(b) - Power and Authority,
Section 3.3(c) - Action, Section 3.3(d) - Binding Effect of Other
Agreements and Section 3.3(ii) - Environmental shall survive and
continue in full force and effect for five (5) years following
the Closing Date; and
(d) the remaining representations and warranties set forth in Article 3,
or given by the Vendors in any other certificate, instrument,
agreement or other document delivered pursuant to this Agreement,
shall continue in full force and effect until March 31, 2008.
If no claim for indemnity pursuant to Article 9 shall have been made hereunder
prior to expiry of the applicable survival period specified in this Section 3.4,
the Vendors making the applicable representation or warranty shall have no
further liability hereunder with respect to any such representation and
warranty. Notwithstanding the preceding sentence, any covenant, agreement,
representation or warranty in respect of which indemnity may be sought under
Article 9 shall survive the time at which it would otherwise terminate pursuant
to Section 3.4, if written notice in reasonable detail of the inaccuracy or
breach thereof giving rise to such right to indemnity shall have been given by
the party seeking indemnification to the party against whom such indemnity may
be sought prior to such time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND SRCL
4.1 Basis of Representations
(a) Parent and SRCL each represent and warrant to the Vendors that each
of the statements contained in Section 4.2 is true and correct as at
the time of execution and delivery of this Agreement by the
Purchaser, except for any such statement which expressly speaks as
at some other time.
(b) Any such statement which expressly speaks as at a time other than
the time of execution and delivery of this Agreement by Parent and
SRCL was or will be true and correct as at the time at which such
statement speaks.
(c) Each of such statements will be true and correct at the Closing Time
and Parent and SRCL acknowledge that the Vendors are relying on such
representations and warranties in connection with the sale of the
Purchased Shares and the completion of the other transactions
hereunder.
4.2 Representations and Warranties of Parent and SRCL
(a) Due Incorporation and Organization of Purchaser -- Parent is a
corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts. SRCL is
corporation duly organized, validly existing and in good standing
under the laws of the province of Ontario.
(b) Corporate Power and Authority -- Each of Parent and SRCL has all
necessary power, authority and capacity to enter into and perform
its obligations pursuant to the terms of this Agreement and all
agreements contemplated therein, to which Parent or SRCL is
party, and is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so
qualified would have a Purchaser Material Adverse Effect,
individually or in the aggregate.
(c) No Conflicting Interests -- The execution, delivery and performance
of this Agreement by Parent and SRCL and each and every agreement or
document to be executed and delivered by them hereunder and the
consummation of the transactions contemplated herein will not in any
material respect violate, be in conflict with, result in a breach
of, constitute a default, or cause the acceleration of any
obligation of Parent or SRCL, under:
(i) any agreement, instrument, licence, permit or authority to
which Parent or SRCL is, or is entitled to be, a party or to
which any or all of its property is subject;
(ii) any provision of the articles, bylaws or resolutions of the
board of directors (or any committee thereof) or shareholders,
or any constating documents, as applicable of Parent or SRCL;
(iii) any judgment, decree, order, statute, rule or regulation
applicable to Parent or SRCL; or
(iv) any provision of law or regulation of any governmental or
regulatory authority or any judicial or administrative order,
award, judgment or decree applicable to Parent or SRCL;
except for such violations, conflicts, breaches, defaults or
accelerations that would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse
Effect.
(d) Corporate Action -- At the Closing Time, Parent and SRCL will have
taken all necessary actions, steps and corporate and other
proceedings to approve or authorize, validly and effectively, the
entering into and the execution, delivery and performance of this
Agreement and any other agreements to which it is a party
contemplated herein, and the purchase of the Purchased Shares.
(e) Binding and Enforceable Agreement -- This Agreement has been duly
executed and delivered by Parent and SRCL and constitutes a
legal, valid and binding obligation of Parent and SRCL
enforceable in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable
remedies may be granted only in the discretion of a court of
competent jurisdiction.
(f) Binding Effect of Other Agreements -- At the Closing Time, each
agreement contemplated to be executed and delivered hereunder by
Parent and SRCL at or before the Closing Time will have been duly
executed and delivered by Parent and SRCL, as applicable, and
shall constitute a valid and binding obligation of Parent and
SRCL, as applicable, enforceable in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency
and other laws affecting the rights of creditors generally and
except that equitable remedies may be granted only in the
discretion of a court of competent jurisdiction.
(g) Regulatory Approvals of Transactions -- No permits, licences,
certifications, approvals, consents, orders-in-council,
legislation or other action of any governmental or regulatory
authority are required for the execution, delivery or performance
by Parent or SRCL of this Agreement or the transactions
contemplated herein, or for the execution, delivery or
performance by Parent and SRCL of any other agreement
contemplated hereunder to be delivered by Parent or SRCL, as
applicable, at or before the Closing Time or the transactions
contemplated therein.
(h) Investment Canada -- Each of Parent and SRCL is a "WTO Investor"
within the meaning of the Investment Canada Act.
4.3 Nature and Survival of Representations and Warranties
The representations and warranties of Parent and SRCL contained in this
Agreement shall survive Closing and, notwithstanding Closing or any documents
delivered or investigations made in connection therewith, shall continue in full
force and effect for the benefit of the Vendors until March 31, 2008.
Notwithstanding the preceding sentence, any covenant, agreement, representation
or warranty in respect of which indemnity may be sought under Article 9 shall
survive the time at which it would otherwise terminate pursuant to Section 4.2,
if written notice in reasonable detail of the inaccuracy or breach thereof
giving rise to such right to indemnity shall have been given by the party
seeking indemnification to the party against whom such indemnity may be sought
prior to such time.
ARTICLE 5
COVENANTS OF THE VENDORS
5.1 No Shop; Transfer
The Vendors agree with the Purchaser that, during the period from the date
hereof to the Closing Time, they shall not, nor shall they permit any of their
respective Affiliates, Associates, agents, consultants, advisors or
representatives to:
(i) directly or indirectly, solicit any proposal relating to the
acquisition by another party of all or any portion of the
capital stock of any member of the Robeez Group or all or
any portion of the assets of the Business; or
(ii) directly or indirectly, engage in any discussions or
negotiations with any other party regarding any such
acquisition, or otherwise encourage or facilitate any
efforts by any other party to engage in such an acquisition;
(iii) sell, transfer or dispose, or agree to sell, transfer or
dispose, of all or any portion of the capital stock of any
member of the Robeez Group or all or any portion of the
assets of the Business, other than, with respect to the sale
or disposition of assets, those made in the ordinary course
of business and consistent with past practice.
5.2 Access to the Robeez Group
The Vendors shall forthwith provide reasonable access to the Purchaser and
its authorized representatives, if requested by the Purchaser, to all title
documents, Contracts, financial statements, minute books, share certificate
books, share registers, plans, reports, licences, orders, permits, books of
account, accounting records, constating documents and all other documents,
information or data relating to the Robeez Group and the Business. The Vendors
and the Robeez Group shall afford the Purchaser and its authorized
representatives every reasonable opportunity to have free and unrestricted
access to the Business and the property, assets, undertaking, records and
documents of the Robeez Group during normal business hours. The Vendors and the
Robeez Group shall afford the Purchaser reasonable access to the employees and
authorized representatives of the Robeez Group during normal business hours. At
the request of the Purchaser, the Vendors shall execute or cause to be executed
such consents, authorizations and directions as may be reasonably necessary to
permit any inspection of the Business and any property of the Robeez Group or to
enable the Purchaser or its authorized representatives to obtain full access to
all files and records relating to the Robeez Group and any of the assets of the
Robeez Group maintained by governmental or other public authorities.
5.3 Delivery of Books and Records
At the Closing Time there shall be delivered to the Purchaser, by the
Vendors, all of the books and records of and relating to the Robeez Group and
the Business. The Purchaser agrees that it will preserve the books and records
so delivered to it for a period of six (6) years from the Closing Date, or for
such longer period as is required by any applicable law, and will permit the
Vendors or their authorized representatives reasonable access thereto in
connection with the affairs of the Vendors relating to their matters, but the
Purchaser shall not be responsible or liable to the Vendors for or as a result
of any accidental loss or destruction of or damage to any such books or records.
5.4 Conduct Prior to Closing
Without in any way limiting any other obligations of the Vendors hereunder
and excluding the Pre-Closing Transactions, during the period from the date
hereof to the Closing Time:
(a) Conduct Business in the Ordinary Course -- The Vendors shall cause
the Robeez Group to conduct the Business and the operations and
affairs of the Robeez Group in the ordinary and normal course of
business consistent with past practice, and the Robeez Group
shall not, without the prior written consent of the Purchaser,
enter into any transaction or refrain from doing any action that,
if effected before the date of this Agreement, would constitute a
breach of any representation, warranty, covenant or other
obligation of the Vendors contained herein, and provided further
that the Vendors shall not enter into any material supply
arrangements relating to the Robeez Group, make any material
decisions or enter into any material Contracts with respect to
the Robeez Group, increase the compensation payable or to become
payable to its directors, officers, employees or consultants,
except for increases in salary or wages of employees who are not
officers in accordance with past practices, or grant any
severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee,
or establish, adopt, enter into or amend any Employee Plan
without the consent of the Purchaser, which consent shall not be
unreasonably withheld;
(b) Continue Insurance -- The Vendors shall cause the Robeez Group to
continue to maintain in full force and effect all policies of
insurance or renewals thereof now in effect, and shall give all
notices and present all claims under all policies of insurance in a
due and timely fashion;
(c) Contractual Consents -- The Vendors shall use their best efforts to
give or obtain or cause the Robeez Group to give or obtain the
notices, consents and approvals described in Schedule 3.3(m);
(d) Preserve Goodwill -- The Vendors shall use their best efforts to
preserve, and cause the Robeez Group to preserve intact, the
Business and the property, assets, operations and affairs of the
Robeez Group and to carry on the Business and the affairs of the
Robeez Group as currently conducted, and to promote and preserve for
the Purchaser the goodwill of suppliers, customers and others having
business relations with the Robeez Group;
(e) Absence of Changes -- The Vendors and the Robeez group shall not
take any action which would cause the representations in section
3.3(p) of the Agreement to be untrue at the Closing Time, without
the consent of the Purchaser.
(f) Discharge Liabilities -- The Vendors shall cause the Robeez Group to
pay and discharge the liabilities of the Robeez Group in the
ordinary course in accordance and consistent with the past practice
of the Robeez Group, except those contested in good faith by the
Robeez Group;
(g) Corporate Action -- The Vendors shall use their best efforts to take
and cause the Robeez Group to take all necessary action, steps and
proceedings to approve or authorize, validly and effectively, the
execution and delivery of this Agreement and the other agreements
and documents contemplated hereby, and to complete the transfer
of the Purchased Shares to the Purchaser, and to cause all
necessary meetings of directors, shareholders of the Robeez Group
to be held for such purpose; and
(h) Best Efforts -- The Vendors shall use their best efforts to satisfy
the conditions contained in Section 7.1.
5.5 Delivery of Documents
The Vendors shall deliver to the Purchaser all necessary transfers,
assignments and other documentation reasonably required to transfer the
Purchased Shares to the Purchaser with a good and marketable title, free and
clear of all Encumbrances.
5.6 Notice to Purchaser
From and after the date of this Agreement until the Closing Date, the
Vendors shall promptly notify the Purchaser in writing:
(a) regarding any development which has or could reasonably be expected
to have a Material Adverse Effect, individually or in the aggregate;
(b) if they have determined that a state of facts exists which will
result in a representation or warranty contained in Article 3 hereof
being untrue as of the Closing Date, or any breach of a condition
set out in Section 7.1.
5.7 Expenses
Except as otherwise provided herein, all costs and expenses incurred by
the Vendors and the Robeez Group in connection with this Agreement, the related
transaction documents and the consummation of the transactions contemplated
hereby and thereby shall be paid by the Vendors and the Robeez Group, whether or
not any of the transactions contemplated hereby is consummated.
5.8 Delivery of Robeez Group Closing Documentation
The Vendors shall deliver to the Purchaser good standing certificates and
certificates of status, as applicable for each member of the Robeez Group, and
two copies, certified by a senior officer of each member of the Robeez Group,
dated as of the Closing Date, of the articles of organization or constating
documents, as applicable, for each member of the Robeez Group, and by-laws of
each member of the Robeez Group. The Vendors shall also execute and deliver or
cause to be executed and delivered two copies of each of such other documents
relevant to the Closing as the Purchaser, acting reasonably, may request.
ARTICLE 6
COVENANTS OF THE PURCHASER
6.1 Delivery of the Purchaser's Closing Documentation
The Purchaser shall deliver to the Vendors good standing certificates and
certificates of status, as applicable for each of Parent and SRCL, and two
copies, certified by a senior officer of each of Parent and SRCL, dated as of
the Closing Date, of the articles of organization or constating documents, as
applicable, for each of Parent and SRCL, and by-laws of each of Parent and SRCL.
The Purchaser shall also execute and deliver or cause to be executed and
delivered two copies of each of such other documents relevant to the Closing as
the Vendors, acting reasonably, may request.
6.2 Tax Returns
The Purchaser shall cause each member of the Robeez Group to file a tax
return in respect of its deemed fiscal year end on the change of control
resulting from the transactions contemplated in this Agreement to the extent
required under applicable law. The Purchaser will cause Robeez Holdings, Robeez
US Holdings Ltd., Robeez International and Robeez Footwear to elect in any
return of income under Part 1 of the Tax Act filed for such company's taxation
year ended immediately before the acquisition of control by the Purchaser not to
have subsection 256(9) of the Tax Act apply.
6.3 Expenses
Except as otherwise provided herein, all costs and expenses incurred by
the Purchaser in connection with this Agreement, the related transaction
documents and the consummation of the transactions contemplated hereby and
thereby shall be paid by the Purchaser, whether or not any of the transactions
contemplated hereby is consummated.
ARTICLE 7
CONDITIONS OF CLOSING
7.1 Conditions of Closing in Favour of the Purchaser
The sale and purchase of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Purchaser, to be fulfilled
or performed at or prior to the Closing Time:
(a) Representations and Warranties -- The representations and warranties
of the Vendors contained in this Agreement shall be true and correct
at the Closing Time, with the same force and effect as if such
representations and warranties were made at and as of such time, and
certificates of the Vendors dated the Closing Date to that effect
shall have been delivered to the Purchaser, such certificates to be
in form and substance satisfactory to the Purchaser, acting
reasonably;
(b) Covenants -- All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Vendors and the
Robeez Group at or before the Closing Time shall have been complied
with or performed, and certificates of the Vendors dated the Closing
Date to that effect shall have been delivered to the Purchaser, such
certificates to be in form and substance satisfactory to the
Purchaser, acting reasonably;
(c) Contractual Consents -- The Vendors shall have given or obtained the
notices, consents and approvals described in Schedule 3.3(m) and
delivered copies of such notices, consents or approvals to the
Purchaser, in each case in form and substance satisfactory to the
Purchaser, acting reasonably;
(d) Material Adverse Change -- There shall have been no Material Adverse
Change since the date of this Agreement;
(e) Receipt of Closing Documentation -- The Purchaser shall have
received all documentation required to be delivered by the Vendors
to the Purchaser at or before the Closing Time in accordance with
this Agreement, including, without limitation, as provided in
Section 5.8 of this Agreement;
(f) No Action or Proceeding -- No legal or regulatory action or
proceeding shall be pending or threatened by any person to enjoin,
restrict or prohibit the purchase and sale of the Purchased Shares
contemplated hereby;
(g) Statutory Restrictions -- There shall be no impediment, prohibition
or restriction existing and no offence would occur or result at the
Closing Time under any applicable statute or regulation to which the
transactions contemplated hereby would be subject, due to the
consummation of the transactions contemplated hereby;
(h) Legal Matters All actions, proceedings, instruments and documents
required to implement this Agreement or instrumental thereto, and
all legal matters relating to the purchase of the Purchased Shares
contemplated shall have been approved as to form and legality by the
Purchaser, acting reasonably; and
(i) Kenton Low Option -- Robeez Footwear and Kenton Low shall have
entered into the Kenton Low Option Termination Agreement, which
shall provide for the termination of the option held by Kenton Low
using the corporate funds of Robeez Footwear, and the payment due to
Kenton Low under the Kenton Low Option Termination Agreement shall
have been made, less the statutory withholding payments required.
If any of the conditions contained in this Section 7.1 shall not be performed or
fulfilled at or prior to the Closing Time to the satisfaction of the Purchaser,
the Purchaser may, by notice to the Vendors, terminate this Agreement and the
obligations of the Vendors and the Purchaser under this Agreement, other than
the obligations contained in Sections 10.1, 10.7, 10.8 and 10.9, without
prejudice to any remedies available to the Purchaser as a result of a breach of
covenant, representation or warranty by the Vendors. Any such condition may be
waived in whole or in part by the Purchaser without prejudice to any claims it
may have for breach of covenant, representation or warranty. If no such notice
is given prior to the completion of Closing, then the Purchaser shall be deemed
to have elected to proceed with Closing as contemplated by Article 8, without
prejudice to its right to claim damages for breach of any representation,
warranty or covenant, unless expressly waived.
7.2 Conditions of Closing in Favour of the Vendors
The purchase and sale of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Vendors, to be fulfilled
or performed at or prior to the Closing Time:
(a) Representations and Warranties -- The representations and warranties
of Parent and SRCL contained in this Agreement shall be true and
correct at the Closing Time, with the same force and effect as if
such representations and warranties were made at and as of such
time, and a certificate of a senior officer of Parent and SRCL dated
the Closing Date to the effect shall have been delivered to the
Vendors, such certificate to be in form and substance satisfactory
to the Vendors, acting reasonably;
(b) Covenants -- All of the terms, covenants and conditions of this
Agreement to be complied with or performed by Parent and SRCL at or
before the Closing Time shall have been complied with or performed,
and a certificate of a senior officer of Parent and SRCL dated the
Closing Date to that effect shall have been delivered to the
Vendors, such certificate to be in form and substance satisfactory
to the Vendors, acting reasonably;
(c) Receipt of Closing Documentation -- The Vendors shall have received
all documentation required to be delivered by the Purchaser to the
Vendors at or before the Closing Time in accordance with this
Agreement, including, without limitation, as provided in Section 6.1
of this Agreement;
(d) No Action or Proceeding -- No legal or regulatory action or
proceeding shall be pending or threatened by any person to enjoin,
restrict or prohibit the purchase and sale of the Purchased Shares
contemplated hereby;
(e) Statutory Restrictions -- There shall be no impediment, prohibition
or restriction existing and no offence would occur or result at the
Closing Time under any applicable statute or regulation to which the
transactions contemplated hereby would be subject, due to the
consummation of the transactions contemplated hereby; and
(f) Legal Matters -- All actions, proceedings, instruments and documents
required to implement this Agreement, or instrumental thereto, shall
have been approved as to form and legality by the Vendors, acting
reasonably.
If any of the conditions in this Section 7.2 shall not be performed or fulfilled
at or prior to the Closing Time to the satisfaction of the Vendors, the Vendors
may, by notice to the Purchaser, terminate this Agreement and the obligations of
the Vendors and the Purchaser under this Agreement, other than the obligations
contained in Sections 10.1, 10.7, 10.8 and 10.9, without prejudice to any
remedies available to the Vendors as a result of a breach of covenant,
representation or warranty by the Purchaser. Any such condition may be waived in
whole or in part by the Vendors without prejudice to any claims they may have
for breach of covenant, representation or warranty. If no such notice is given
prior to the completion of Closing, then the Vendors shall be deemed to have
elected to proceed with Closing as contemplated by Article 8, without prejudice
to the Vendors' right to claim damages for breach of any representation,
warranty or covenant, unless expressly waived.
ARTICLE 8
CLOSING
8.1 Place of Closing
The Closing shall take place at the Closing Time at Messrs. Farris,
Vaughan, Xxxxx & Xxxxxx LLP, 25th Floor, 700 West Georgia Street, Vancouver,
British Columbia, or at such other place as may be agreed upon by the Vendors
and the Purchaser, and shall be deemed effective as of the Effective Time.
8.2 Deliveries by Vendors at Closing
At the Closing Time and at the place of Closing, the Vendors shall deliver
to the Purchaser:
(a) a certificate signed by the Vendors with respect to the
representations, warranties and covenants of the Vendors pursuant
to Sections 7.1(a) and 7.1(b);
(b) the share certificates representing the Purchased Shares, duly
endorsed for transfer to Parent and SRCL, as applicable, or as they
may direct;
(c) certificates of incumbency for each member of the Robeez Group
listing all of their respective directors and officers as at
Closing;
(d) certified copies of the constating documents and, if applicable, the
bylaws of each member of the Robeez Group;
(e) certificates of good standing or status of each member of the Robeez
Group;
(f) a certified copy of a resolution of the directors of Robeez
Holdings, Robeez International and Robeez US Holdings Ltd.
consenting to the transfer of the Purchased Shares to the Purchaser
and authorizing the registration of such transfer on the central
securities register of Robeez Holdings, Robeez International and
Robeez US Holdings Ltd., respectively;
(g) any and all necessary consents set out in Schedule 3.3(m), pursuant
to the Material Contracts to the transfer of the Purchased Shares
pursuant to the terms of this Agreement;
(h) the minute books and corporate seals (if any) of each member of the
Robeez Group;
(i) the legal opinion of the Vendors' Solicitors substantially in the
form attached hereto as Exhibit 1, dated as of the Closing Date;
(j) a release executed by the Vendors in favour of the Robeez Group and
the Purchaser and its Affiliates in the form annexed hereto as
Exhibit 2;
(k) a release executed by Xxxxxxxxx & Consultants Ltd. and Xxxxxxxxx
with respect to the termination of the consulting agreement with
Robeez Footwear;
(l) a comfort letter from HSBC Bank Canada with respect to the payout
and discharge of the Robeez Group credit facilities with HSBC Bank
Canada;
(m) resignations of such directors and officers of the Robeez Group as
the Purchaser may specify effective as of the Closing Time;
(n) the Escrow Agreement duly executed by each of the Vendors;
(o) a termination agreement executed by all parties to the Shareholders'
Agreement terminating the Shareholders' Agreement;
(p) a release executed by each holder of a Shareholder Loan
acknowledging receipt of payment in full for such Shareholder Loan;
(q) a consulting agreement with the Purchaser duly executed by SLW
Consulting Inc. and Xxxxxx, in a form satisfactory to SLW
Consulting Inc.;
(r) a non-compete agreement with the Purchaser duly executed by Xxxxxx,
in a form satisfactory to Xxxxxx;
(s) confirmation and release agreements executed by (i) Kenton Low in
connection with Kenton's Change of Control Agreement, and (ii) Xxxxx
Xxxxxx in connection with Mikel's Change of Control Agreement and
(t) such other certificates or documents as the Vendors are required to
deliver pursuant to the terms of this Agreement or as the Purchaser
may reasonably require to give effect to this Agreement.
8.3 Deliveries by Purchaser at Closing
At the Closing Time and at the place of Closing, the Purchaser shall
deliver to the Vendors:
(a) a wire transfer to the Vendors' Solicitors in an amount equal to the
amount set out in Section 2.2 prior to the adjustments set out in
Sections 2.5, 9.9, 9.14 and 9.15, less (i) the CapWest Fee; and (ii)
the Working Capital Deficiency estimated pursuant to Section 2.5(a),
if applicable;
(b) confirmation of wire transfer to the Escrow Agent in an amount equal
to the Indemnity Holdback, the Change of Control Holdback, the
Idealever Holdback and the Working Capital Escrow Amount and a
receipt from the Escrow Agent acknowledging receipt of such funds;
(c) a wire transfer to the Vendors' Solicitor in an amount equal to the
Shareholders' Loans outstanding on the Closing Date;
(d) confirmation of wire transfer of the Outstanding Third Party Debt in
a form satisfactory to the Vendors, if such debts are paid out by
the Purchaser;
(e) confirmation of payment of the CapWest Fee in a form satisfactory to
the Vendors;
(f) a certificate executed by each of Parent and SRCL with respect to
the representations, warranties and covenants of Parent and SRCL
pursuant to Sections 7.2(a) and 7.2(b);
(g) a certified copy of a resolution of the directors of Parent and SRCL
approving this Agreement and the transactions contemplated hereby;
(h) the legal opinion of the Purchaser's Solicitors substantially in the
form attached hereto as Exhibit 3, dated as of the Closing Date;
(i) a consulting agreement with SLW Consulting Inc. and Xxxxxx duly
executed by the Purchaser, in a form satisfactory to the Purchaser;
(j) a non-compete agreement with Xxxxxx duly executed by the Purchaser,
in a form satisfactory to the Purchaser;
(k) the Escrow Agreement duly executed by the Purchaser and the Escrow
Agent, together with confirmation of receipt of the Change of
Control Holdback, the Indemnity Holdback, the Idealever Holdback and
the Working Capital Escrow Amount from the Escrow Agent, in a form
satisfactory to the Vendors; and
(l) such other certificates or documents as the Purchaser is required to
deliver pursuant to the terms of this Agreement or as the Vendors
may reasonably require.
8.4 Closing Escrow
All payments or documents delivered by any person at the Closing Time
shall be deemed not to have been delivered until each of the Vendors and the
Purchaser have declared that they are satisfied with the form and substance of
all of the payments and documents to be delivered to such person at Closing and
all conditions to the delivery or release of any payments or documents to be
delivered at the Closing Time by parties other than the Vendors or the Purchaser
shall have been satisfied.
8.5 Flow of Funds
The Vendors and the Purchaser shall cooperate with each other to prepare a
detailed funds flow statement showing all parties entitled to payments under or
in connection with this Agreement and containing the wire or other payment
instructions for all such parties. The funds flow statement is attached hereto
as Exhibit 6.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by the Vendors.
Subject to limitations set forth in Section 9.8, the Vendors shall,
jointly and severally, indemnify, defend and save harmless the Purchaser from
and against any and all Losses suffered or incurred by the Purchaser or any
member of the Robeez Group as a result of, arising from or in connection with:
(a) any representation or warranty made or given by the Vendors in this
Agreement or any agreement, certificate or other document delivered
by the Vendors pursuant to this Agreement having been false or
misleading as of the time when made or as of the Closing Date;
(b) any failure by the Vendors to observe or perform any covenant or
obligation contained in this Agreement or in any agreement or other
document entered into by the Vendors pursuant to this Agreement; and
(c) any claim for unpaid taxes and resulting penalties due with respect
to the Pre-Closing Transactions, including any penalties arising
from a failure to timely file any tax returns required in connection
with the Pre-Closing Transactions.
9.2 Indemnification by the Parent and SRCL.
Parent and SRCL shall, jointly and severally, indemnify, defend and save
harmless the Vendors from and against any and all Loss suffered or incurred by
the Vendors as a result of, arising from or in connection with:
(a) any representation or warranty made or given by Parent or SRCL in
this Agreement or any agreement, certificate or other document
delivered by Parent or SRCL pursuant to this Agreement having been
false or misleading as of the time when made or as of the Closing
Date;
(b) any failure by Parent or SRCL to observe or perform any covenant or
obligation contained in this Agreement or in any agreement or other
document entered into by Parent or SRCL pursuant to this Agreement.
9.3 Manner of Payment
An Indemnified Party making a claim for indemnification under this Article
9 shall provide written notice of the claim to the Indemnitor, which written
notice shall set out a description of the claim, the amount claimed by the
Indemnified Party (if known and quantifiable, and including any taxes included
in the amount of the claim) and the basis for the claim. Any Indemnity Payments
described in this Article 9 shall include interest on such amounts at the Prime
Rate from the date of Loss by the Indemnified Party to the date of payment and
shall be paid in full by the Indemnitor within 30 days after the determination
of the amount of the Indemnity Payment. If payment for any Loss is to be made
out of funds held by the Escrow Agent, the parties shall direct the Escrow Agent
to release from such funds the amount of the Loss.
9.4 Notice of Third Party Claims
If an Indemnified Party receives notice of the commencement or assertion
of any Third Party Claim or obtains knowledge of any threatened Third Party
Claim, the Indemnified Party shall give the Indemnitor reasonably prompt notice
thereof, but in any event no later than 30 days after receipt of any written
notice of such Third Party Claim. Such notice to the Indemnitor shall describe
the Third Party Claim in reasonable detail and shall indicate, if reasonably
practicable, the estimated amount of the Loss that has been or may be sustained
by the Indemnified Party.
9.5 Defence of Third Party Claims
The Indemnitor may participate in, at its sole cost and expense, or, if it
gives written notice to the Indemnified Party that the Indemnitor agrees that it
is obligated under the terms of its indemnity in connection with such claim,
assume the defence of any Third Party Claim by giving notice to that effect to
the Indemnified Party at any time after receiving notice of that Third Party
Claim, provided, however, that the Vendors, acting as Indemnitor, shall be
entitled to assume the defence of only those Third Party Claims pursuant to
which (i) such third party seeks solely monetary damages; (ii) an adverse
resolution of such third party's claim would not have a material adverse effect
on the goodwill or reputation of the Purchaser or the Robeez Group or on the
future conduct of the business of the Purchaser or the business of the Robeez
Group. If the Indemnitor elects to assume the defence of any such Third Party
Claim or proceeding and complies with the foregoing sentence, the Indemnitor
shall (i) provide prompt notice of such election to the Indemnified Party, (ii)
consider in good faith the views of the Indemnified Party and its counsel
regarding such Third Party Claim and (iii) seek the consent of the Indemnified
Party and its counsel (not to be unreasonably withheld, it being agreed that a
material adverse effect on the Purchaser's or any member of the Robeez Group's
business and operations shall be deemed to be a reasonable basis to withhold
consent) prior to any settlement or compromise of such Third Party Claim and
related proceedings unless such settlement or compromise shall consist only of
the payment of money by the Indemnitor and includes a full release of such
Indemnified Party. The Indemnitor's right to do so shall be subject to the
rights of any insurer or other party who has potential liability in respect of
that Third Party Claim. The Indemnitor agrees to pay all of its own expenses of
participating in or assuming such defence. The Indemnified Party shall cooperate
in good faith in the defence of each Third Party Claim, even if the defence has
been assumed by the Indemnitor, and may participate in such defence assisted by
counsel of its own choice at its own expense, (except that the Indemnitor will
be responsible for the fees and expenses of a single co-counsel to the extent
that such co-counsel reasonably concludes that the counsel the Indemnitor has
selected has a conflict of interest and provides timely notice of such fact to
the Indemnitor). Unless the Indemnified Party has received notice that the
Indemnitor has elected to assume the defence of such Third Party Claim, the
Indemnified Party may assume such defence, assisted by counsel of its own
choosing, and the Indemnitor shall be liable for all reasonable costs and
expenses paid or incurred in connection therewith and any Loss suffered or
incurred by the Indemnified Party with respect to such Third Party Claim. If an
Indemnitor elects to assume the defence of any Third Party Claim as provided in
this Section 9.5, the Indemnified Party shall not pay, or permit to be paid, any
part of any claim or demand arising from such asserted liability unless the
Indemnitor consents in writing to such payment or unless the Indemnitor
withdraws from the defence of such asserted liability or unless a final judgment
from which no appeal may be taken is entered against the Indemnified Party for
such liability. However, if the Indemnitor does not elect to defend such Third
Party Claim in accordance with the provisions above, fails to take reasonable
steps necessary to defend diligently such Third Party Claim, or withdraws from
such defence, the Indemnified Party may, at its option, elect to assume the
defence of such Third Party Claim and/or to compromise or settle the Third Party
Claim assisted by counsel of its own choosing, and the Indemnitor shall be
liable for all reasonable costs and expenses paid or incurred in connection
therewith.
9.6 Assistance for Third Party Claims
The Indemnitor and the Indemnified Party will use all reasonable efforts
to make available to the party which is undertaking and controlling the defence
of any Third Party Claim (the "Defending Party"):
(a) those employees whose assistance, testimony or presence is necessary
to assist the Defending Party in evaluating and in defending any
Third Party Claim;
(b) all documents, records and other materials in the possession of such
party reasonably required by the Defending Party for its use in
defending any Third Party Claim; and
(c) shall otherwise cooperate with the Defending Party. The Indemnitor
shall be responsible for all reasonable expenses associated with
making such documents, records and materials available and for
all reasonable expenses of any employees made available by the
Indemnified Party to the Indemnitor hereunder, which expenses
shall not exceed the actual out-of-pocket cost to the Indemnified
Party associated with such employees (excluding normal salaries,
wages and benefits).
9.7 Failure to Give Timely Notice
Except in connection with the notice obligations under Section 9.5, a
failure to give timely notice as provided in this Article 9 shall not affect the
rights or obligations of any party except and only to the extent that, as a
result of such failure, any party which was entitled to receive such notice was
deprived of its right to recover any payment under its applicable insurance
coverage, becomes liable for a larger Loss, loses the benefit of any available
defence (in whole or in part), or was otherwise prejudiced as a result of such
failure.
9.8 Limitations
The liability of the parties with respect to any claims for indemnity
under this Agreement shall be subject to the following limitations:
(a) no claims for indemnification may be made by the Purchaser against
the Vendors in respect of any Loss arising in connection with
Sections 9.1(a) or 9.1(b) unless the aggregate of all Losses
suffered or incurred by the Purchaser in respect of all such Losses
exceeds $250,000 in the aggregate, in which event the whole amount
of all such Losses (i.e. not just the excess over $250,000) may be
recovered by the Purchaser;
(b) no claims for indemnification may be made by the Vendors against the
Purchaser in respect of any Loss arising in connection with any
misrepresentation or breach of warranty made or given by the
Purchaser in this Agreement, unless the aggregate of all Losses
suffered or incurred by the Vendors in respect of all such
misrepresentations or breaches of warranty exceeds $250,000 in
the aggregate, in which event the whole amount of all such Losses
(i.e. not just the excess over $250,000) may be recovered by the
Vendors;
(c) the liability of each Vendor for the representations and warranties
contained in Section 3.2, are several (and not joint and several)
and shall be limited to such Vendor's proportionate share of the
Purchase Price; and
(d) notwithstanding any other provision contained herein, the aggregate
liability of the Vendors for all Losses shall not exceed $6,000,000,
excluding:
(i) claims for indemnification for breaches of any of the
representations and warranties contained in Sections 3.2,
3.3(a), 3.3(b) or 3.3(g);
(ii) claims for indemnification pursuant to Sections 9.1(c).
The limitations contained in this Section 9.8 shall not apply to any
amounts payable pursuant to Section 2.5 or Section 9.14.
9.9 Indemnity Holdback
The Escrow Agent shall hold the Indemnity Holdback pursuant to the terms of
the Escrow Agreement as security for the Vendors' obligations set out in Section
9.1. If the Purchaser has not provided written notice to the Vendors and the
Escrow Agent by August 31, 2007 setting out in reasonable detail the basis for a
claim for indemnification pursuant to Section 9.1, one-half of the Indemnity
Holdback (plus all accrued interest thereon) shall be released by the Escrow
Agent to the Vendors. The balance of the Indemnity Holdback (together with
accrued interest thereon) shall be released by the Escrow Agent to the Vendors
on March 31, 2008 provided the Purchaser has not made a claim against the
Vendors for indemnification pursuant to Section 9.1. The Purchase Price set out
in Section 2.2 shall be increased by the amount of the Indemnity Holdback, if
any, that is released to the Vendors pursuant to this Section.
9.10 All Claims
No claim may be made by any party against the other after the Closing for
any Loss arising as a result of any breach or default under this Agreement or
any agreement, certificate or other document delivered pursuant to this
Agreement except pursuant to and subject to this Article 9.
9.11 Certain Taxes and Fees
All transfer, documentary, sales, use, stamp, registration and other such
Taxes, and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) incurred in connection with consummation
of the transactions contemplated by this Agreement shall be paid by the
Purchaser when due.
9.12 Tax Liabilities
The parties hereto agree that with regard to any Loss in respect of
liability under the Tax Act or any other applicable taxing legislation in
respect of which the Vendors have agreed to indemnify the Purchaser in
accordance with the terms of this Agreement and any related agreements, all
Losses shall be reduced by the net amount of Tax benefits that are actually
realized by the Purchaser or any member of the Robeez Group by reason of such
Loss, liability or damage in the tax year that such indemnification payment is
required to be included in taxable income or if and to the extent that such Tax
benefits are actually realized within the subsequent two (2) calendar years, and
provided further that such Tax benefits shall be treated as reducing taxable
income of the Purchaser or any member of the Robeez Group only after all other
Tax benefits of the Purchaser or any member of the Robeez Group available to
reduce taxable income are so used. The Purchaser agrees that it will endeavor to
apply such Losses against any taxable income available to the extent possible so
that the Vendors will have the benefit of this Section.
9.13 Principal Indemnities
Notwithstanding Section 9.8:
(a) Xxxxxx hereby guarantees all representations, warranties and
covenants of the Xxxxxx Trust and WilsonCo contained in this
Agreement or in any agreement or other document entered into by the
Xxxxxx Trust or WilsonCo pursuant to this Agreement, and agrees to
indemnify and save harmless the Purchaser from any Loss arising from
any breach of such representations, warranties and covenants.
(b) Xxxxxxx hereby guarantees all representations, warranties and
covenants of the Xxxxxxx Trust contained in this Agreement or in any
agreement or other document entered into by the Xxxxxxx Trust
pursuant to this Agreement, and agrees to indemnify and save
harmless the Purchaser from any Loss arising from any breach of such
representations, warranties and covenants.
(c) Xxxxxxxxx hereby guarantees all representations, warranties and
covenants of the Xxxxxxxxx Trust and FingarsonCo contained in this
Agreement or in any agreement or other document entered into by the
Xxxxxxxxx Trust or FingarsonCo pursuant to this Agreement, and
agrees to indemnify and save harmless the Purchaser from any Loss
arising from any breach of such representations, warranties and
covenants.
9.14 Change of Control Holdback
(a) The Vendors shall be responsible for and shall jointly and severally
indemnify the Purchaser and the Robeez Group for the following amounts if and
when payable by Robeez Footwear, any other member of the Robeez Group or any
successor in interest of the foregoing (the "CoC Payor"):
(i) the difference between (A) the amount of any severance and/or
change of control payments (as determined in accordance with
Kenton's Change of Control Agreement and Kenton's Employment
Agreement) payable to Kenton Low pursuant to Kenton's Change of
Control Agreement and Kenton's Employment Agreement in excess of
$459,207 (the "Kenton Excess CoC Amount") and (B) the CoC Tax
Benefit (as defined in Section 9.14(c) hereof) attributable to
the Kenton Excess CoC Amount (the difference between (A) and
(B) in each of this sub-paragraph (i) and sub-paragraph (ii)
below shall be referred to herein separately and together as
the "After-Tax CoC Amount"); and
(ii) the difference between (A) the amount of any severance and/or
change of control payments (as determined in accordance with
Mikel's Change of Control Agreement and Mikel's Employment
Agreement) payable to Xxxxx Xxxxxx pursuant to Mikel's Change
of Control Agreement and Mikel's Employment Agreement in
excess of $259,757 (the "Xxxxx Excess CoC Amount") and (B) the
CoC Tax Benefit attributable to the Xxxxx Excess CoC Amount
(the difference between (A) and (B) in each of this
sub-paragraph (i) and sub-paragraph (ii) below shall be
referred to herein separately and together as the "After-Tax
CoC Amount").
(b) Subject to Sections 9.14(c), 9.14(d) and 9.14(e) hereof, the Change of
Control Holdback was calculated as an estimate of the after-tax cost to the CoC
Payor of the sum of (x) the Kenton Excess CoC Amount set forth in the Kenton
Acknowledgment and Release and (y) the Xxxxx Excess CoC Amount set forth in the
Xxxxx Acknowledgment and Release, assuming (A) such payments are fully
deductible from the taxable income of the CoC Payor in the year in which they
are paid and (B) an effective tax rate of 34.12%. The Escrow Agent shall hold
the Change of Control Holdback pursuant to the terms of the Escrow Agreement as
security for the Vendors' obligations under this Section 9.14. The parties shall
direct the Escrow Agent to release the Change of Control Holdback as follows:
(i) if prior to the second anniversary date of the Closing Date the
CoC Payor is required to pay any portion of the Kenton Excess
CoC Amount to Kenton Low, the parties shall direct the
Escrow Agent to release from the Change of Control Holdback
to the CoC Payor an amount equal to the lesser of the
following: (A) the balance of the Change of Control
Holdback then held by the Escrow Agent, including any
interest accrued thereon, and (B) the After-Tax CoC Amount
calculated consistently with the calculation of the Change
of Control Holdback; and
(ii) if prior to the second anniversary date of the Closing Date
the CoC Payor is required to pay any portion of the Xxxxx
Excess CoC Amount to Xxxxx Xxxxxx, the parties shall direct
the Escrow Agent to release from the Change of Control
Holdback to the CoC Payor an amount equal to the lesser of the
following: (A) the balance of the Change of Control Holdback
then held by the Escrow Agent, including any interest accrued
thereon, and (B) the After-Tax CoC Amount calculated
consistently with the calculation of the Change of Control
Holdback; and
(iii) on the day following the second anniversary date of the
Closing Date, the parties shall direct the Escrow Agent to
release the balance, if any, of the Change of Control
Holdback, together with any interest accrued thereon, to the
Vendors unless Kenton Low or Xxxxx Xxxxxx have made a claim
for their respective severance and/or change of control
payments and such claim has not been finally resolved. If any
portion of the Change of Control Holdback is released to the
Vendors pursuant to this Section 9.14, the amount released
shall be added to and increase the Purchase Price.
If any amount is paid to the CoC Payor pursuant to Section 9.14(i), the
Purchaser agrees that it will reimburse the Vendors for any such amount if the
Purchaser or any Affiliate of the Purchaser hires or retains the services of
Kenton Low at any time after such amount is paid until three (3) years after the
Closing Date.
(c) For purposes of determining the liability of the Vendors pursuant to
Section 9.14(a), the following definitions apply:
(i) "Applicable Income Tax Return" means the income tax return of
the CoC Payor under the Tax Act for a taxable year in which
the Kenton Excess CoC Amount or Xxxxx Excess CoC Amount, as
applicable, was paid.
(ii) "CoC Tax Benefit" means an amount equal to the excess of (A)
the amount of Tax calculated at the actual effective tax rate
("CoC Payor Tax") that would have been incurred by the CoC
Payor with respect to the taxable year in which the Kenton
Excess CoC Amount or Xxxxx Excess CoC Amount, as applicable,
was paid, calculated as if the Compensation Expense Deductions
were Zero Dollars ($0), over (B) the actual amount of CoC
Payor Tax with respect to the taxable year in which Kenton
Excess CoC Amount or Xxxxx CoC Amount, as applicable, was
paid, as determined by the CoC Payor on the date the
Applicable Income Tax Return is filed; provided, however, that
if the CoC Payor does not have sufficient taxable income in
such year to use the entire amount of the Compensation Expense
Deductions, the CoC Tax Benefit attributable to the unused
portion of the Compensation Expense Deductions shall be
treated as reducing the amount of liability of the Vendors
pursuant to Section 9.14(a) if and to the extent that such
unused portion of the Compensation Expense Deductions is used
by the CoC Payor (taking into account first all other tax
benefits available to CoC Payor to reduce taxable income in
the year so used) within the subsequent two (2) calendar
years.
(iii) "Compensation Expense Deductions" means an amount equal to the
Kenton Excess CoC Amount or Xxxxx Excess CoC Amount, as
applicable, if and to the extent actually paid by the CoC
Payor.
(iv) "Kenton Acknowledgment and Release" means the Confirmation
Agreement between Robeez Footwear and Kenton Low dated
September 1, 2006, relative to Kenton's Change of Control
Agreement and Kenton's Employment Agreement.
(v) "Kenton's Employment Agreement" means the Employment Agreement
dated May 1, 2006, as amended to date, between Robeez Footwear
and Kenton Low.
(vi) "Xxxxx Acknowledgment and Release" means the Confirmation
Agreement between Robeez Footwear and Xxxxx Xxxxxx dated
September 1, 2006, relative to Mikel's Change of Control
Agreement and Mikel's Employment Agreement.
(vii) "Mikel's Employment Agreement" means the Employment Agreement
dated October 27, 2004, as amended to date, between Robeez
Footwear and Xxxxx Xxxxxx.
(d) If the Vendors' liability calculated pursuant to Section 9.14(a) is
greater than the amount released to the CoC Payor by the Escrow Agent from the
Change of Control Holdback pursuant to Section 9.14(b), the Purchaser shall have
the right to make a claim for indemnification against the Vendors under this
Section 9.14, by providing written notice to the Vendors, for the difference
plus interest at the Prime Rate from the date of such release to the date of
payment, to be paid in full by the Vendors within 30 days after determination.
If the Vendors' liability calculated pursuant to Section 9.14(a) is less than
the amount released to the CoC Payor by the Escrow Agent from the Change of
Control Holdback pursuant to Section 9.14(b), the Vendors shall have the right
to make a claim against the Purchaser, by providing written notice to the
Purchaser, for the difference plus interest at the Prime Rate from the date of
such release to the date of payment, to be paid in full by the Purchaser within
30 days after determination.
(e) In the event that an Applicable Income Tax Return or other income tax
return relevant to the calculation of the CoC Tax Benefit is amended, assessed
or reassessed as the result of an audit, litigation or other proceeding relating
to Taxes, the Purchaser shall recalculate the CoC Tax Benefit and provide a
notice to the Vendors setting forth the resulting increase or decrease, if any,
in the Vendors' liability under this Section 9.14, and applicable payments
pursuant to Section 9.14(d) shall be made within 30 days of the delivery of such
notice. The provisions of this Section 9.14 shall survive and continue in full
force and effect for the period commencing on the Closing Date and ending on the
date expiration date of the applicable statute of limitations (including
extensions thereof) with respect to the Compensation Expense Deductions.
9.15 Idealever Holdback
For a period of one (1) year following the Closing, the Vendors shall the
authority to negotiate and obtain, on behalf of Robeez Footwear and at the
Vendors' sole cost and expense, a waiver of the amounts (in this Section, the
"Change of Control License Payments") payable by Robeez Footwear upon the
completion of the transactions contemplated by this Agreement pursuant to
Section 7.18 of the Software License Agreement dated July 25, 2005 between
Robeez Footwear and Idealever Solutions Inc. ("Idealever"). The Purchaser shall
co-operate with the Vendors and Idealever with respect to such waiver, and shall
sign, if requested by Idealever, an agreement to be bound by the terms of the
License Agreement as contemplated by Section 7.17 of the Software License
Agreement dated July 25, 2005 between Robeez Footwear and Idealever, provided
such agreement to be bound is in a form reasonably acceptable to Purchaser.
If the Vendors are able to obtain a waiver of the Change of Control
License Payments within one (1) year following the Closing, the parties shall
direct the Escrow Agent to release the Idealever Holdback, plus any accrued
interest thereon, to the Vendors.
If, on the first anniversary of the Closing Date the Vendors have not been
able to obtain a waiver of the Change of Control License Payments or Idealever
has demanded payment of the Change of Control License Payments in writing from
Robeez Footwear prior to the first anniversary of the Closing Date, the parties
shall direct the Escrow Agent to release the Idealever Holdback to the Purchaser
to the extent necessary to satisfy the obligations of Robeez Footwear in respect
of the Change of Control License Payments, and to release the balance of the
Idealever Holdback, plus accrued interest thereon, if any, to the Vendors.
Until such time as the Vendors obtain a waiver of the Change of Control
License Payments from Idealever or the first anniversary of the Closing Date,
whichever is earlier, the Purchaser agrees that:
(a) neither the Purchaser nor any of its Affiliates will use the
Idealever software, save and except the Robeez Group, which may
continue to use the Idealever software in a manner consistent with
the past practice of the Robeez Group prior to the Closing Date for
the on-line marketing of Robeez products; and
(b) neither the Purchaser nor any of its Affiliates will pay or agree to
pay the Change of Control License Payments without the prior written
consent of the Vendors.
The Purchase Price set out in Section 2.2 shall be increased by the amount
of the Idealever Holdback, if any, released to the Vendors pursuant to this
Section.
9.16 Kenton Low Option Termination Indemnification.
Notwithstanding any other provisions in this Agreement, the Vendors shall
be responsible for and shall jointly and severally indemnify the Purchaser and
Robeez Footwear for all Taxes that may become payable by Robeez Footwear as a
result of the payment of any amount to Kenton Low under the Kenton Low Option
Termination Agreement in excess of the amount reflected as a liability in the
Closing Working Capital, including without limiting the generality of the
foregoing, any Tax, interest or penalty assessed against Robeez Footwear for
failure to make statutory deductions in respect of tax or other amounts with
respect thereto.
ARTICLE 10
GENERAL
10.1 Confidentiality of Information
Both the Vendors and the Purchaser shall maintain the confidentiality of
any information received from the other in connection with the transactions
contemplated by this Agreement, whether received before or after the date of
this Agreement; provided that the Purchaser and Vendors shall not be restricted
from disclosing any information relating to these transactions if such
information is required to be disclosed under applicable law. If the
transactions contemplated herein are not consummated, each shall return to the
other any confidential schedules, documents or other written information
obtained from the other in connection with this Agreement whether received
before or after the date of this Agreement and the Purchaser agrees that, except
as otherwise authorized by the Vendors, neither the Purchaser nor its
representatives, agents or employees will disclose to third parties any
confidential information or confidential data relating to the Robeez Group or
the Business discovered by the Purchaser or its representatives as a result of
the Vendors and the Robeez Group making available to the Purchaser and its
representatives the information requested by them in connection with the
transactions contemplated herein.
10.2 Notices
Any notice or other writing required or permitted to be given hereunder or
for the purposes hereof to any party shall be sufficiently given if delivered
personally or by telecopier to such party:
(a) in the case of a notice to the Vendors:
Xxxxxx Xxxxxx, WilsonCo and The Xxxxxx Family Trust No. 1:
0000 Xxxxxx Xxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Facsimile: (000) 000-0000
Xxxx Xxxxxxx and The Xxxxxxx Family Trust No. 1:
000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Facsimile: (000) 000-0000
c/o Xxxxx Xxxxxxxxx, The Xxxxxxxxx Family Trust No. 1 and 0753831
B.C. Ltd.
00000 - 000X Xxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Facsimile: (000) 000-0000
With a copy in all cases to:
Farris, Vaughan, Xxxxx & Xxxxxx LLP
000 Xxxx Xxxxxxx Xxxxxx, X.X. Xxx 00000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
(b) in the case of a notice to the Purchaser at:
The Stride Rite Corporation
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
With a copy to Purchaser's U.S. Counsel:
Xxxxxxx Procter LLP
Xxxxxxxx Xxxxx, Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
or at such other address as the party to whom such writing is to be given shall
have last notified to the party giving the same in the manner provided in this
Section 10.2. Any notice delivered to the party to whom it is addressed herein
before provided shall be deemed to have been given and received on the day it is
so delivered at such address, provided that if the notice is delivered after
4:00 p.m. (local time) or if such day is not a Business Day then the notice
shall be deemed to have been given and received on the Business Day next
following such day.
10.3 Entire Agreement
This Agreement and any other documents delivered pursuant to this
Agreement, including the Schedules and exhibits hereto, constitutes the entire
agreement between the parties with respect to the transactions herein
contemplated and cancels and supersedes any prior understandings, agreements,
negotiations and discussions between the parties with respect thereto including,
without limitation, that confidentiality agreement dated June 30, 2006 between
the Purchaser and Robeez Footwear and the exclusivity letter dated July 7, 2006,
as amended, between the Purchaser and Robeez Footwear, except as specifically
provided or contemplated in this Agreement or any agreement, certificate,
affidavit, statutory declaration or other document delivered or given pursuant
to this Agreement. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements or understandings, express or implied,
between the parties hereto other than those expressly set forth in this
Agreement or in any such agreement, certificate, affidavit, statutory
declaration or other document as aforesaid. This Agreement may not be amended or
modified in any respect except by written instrument executed by each of the
parties hereto.
10.4 Tax Information
The parties shall provide each other with such assistance as may
reasonably be requested by any of them in connection with the preparation of any
return of taxes, any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liabilities for taxes arising
out of this Agreement, and each will retain and, upon request of the other,
provide the other with such records or information as is relevant to such
return, audit or examination or proceedings. Such assistance shall include
providing copies of any relevant returns of taxes and supporting work schedules.
The party requesting assistance hereunder shall reimburse the other for
reasonable out-of-pocket expenses incurred by the other in providing such
assistance. Any party in possession of records or information relating to taxes
shall retain such records and information for such time as may be prescribed by
any relevant legislation.
10.5 Enurement
This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and assigns, but shall not be assignable
by any of the parties without the prior written consent of the other parties
except by operation of law or by the Purchaser to any of its Affiliates in
connection with the transactions contemplated by this Agreement, in which case
the Purchaser shall not be relieved from its obligations hereunder and shall be
jointly and severally liable with such assignee for all obligations of the
Purchaser or such assignee hereunder.
10.6 Further Assurances
The parties shall provide all such reasonable assurances as may be
required to consummate the transactions contemplated hereby, and each party
shall provide such further documents or instruments required by any other party
as may be reasonably necessary or desirable to give effect to the intent of this
Agreement and carry out its provisions, whether before or after Closing.
10.7 Commissions, etc.
Any fees or commissions payable to any broker, finder or investment banker
or otherwise shall be the sole responsibility of the Vendors and in no
circumstance shall the Robeez Group or the Purchaser or any of its affiliates
pay any such amounts. The Vendors agree to indemnify and save harmless the
Purchaser from and against all Losses suffered or incurred by the Purchaser in
respect of any commission or other remuneration payable or alleged to be payable
to any broker, agent or other intermediary who purports to act or have acted for
or on behalf of the Vendors or any member of the Robeez Group in connection with
any of the transactions contemplated hereby.
10.8 Disclosure
Prior to any public announcement of the transaction contemplated hereby
pursuant to Section 10.9, neither party shall disclose this Agreement or any
aspect of such transaction except to its board of directors, its senior
management, its legal, accounting, financial or other professional advisors, any
financial institution contacted by it with respect to any financing required in
connection with such transaction and counsel to such institution, or as may be
required by any applicable law or any regulatory authority or stock exchange
having jurisdiction.
10.9 Public Announcements
No public announcement or press release concerning the purchase and sale
of the Purchased Shares shall be made by any party hereto without the prior
approval of the other parties. The foregoing will not apply to any announcement
by any party required in order to comply with laws pertaining to timely
disclosure, provided that such party consults with the other parties before
making any such announcement.
10.10 Best Efforts
The parties acknowledge and agree that, for all purposes of this
Agreement, an obligation on the part of any party to use its best efforts to
obtain any waiver, consent, approval, permit, licence or other document shall
not require such party to make any payment to any person for the purpose of
procuring the same, other than payments for amounts due and payable to such
person, payments for incidental expenses incurred by such person and payments
required by any applicable law or regulation.
[The remainder of this page intentionally left blank]
10.11
Counterparts
This Agreement may be executed in one or more counterparts, which so
executed shall constitute an original and all of which together shall constitute
one and the same agreement. A signed counterpart provided by way of facsimile
shall be as binding upon the parties as an originally signed counterpart.
IN WITNESS WHEREOF this Agreement has been executed by the parties.
SIGNED, SEALED and DELIVERED by )
XXXXXX XXXXXX in the presence of: )
)
/s/ Xxxxxxx X. Xxxxxxxx )
----------------------------------- )/s/ Xxxxxx Xxxxxx
Name )------------------------------------
) XXXXXX XXXXXX
-----------------------------------
Address )
)
-----------------------------------
)
)
Occupation )
SIGNED, SEALED and DELIVERED by )
XXXX XXXXXXX in the presence of: )
)
/s/ Xxxxxxx X. Xxxxxxxx )
----------------------------------- )/s/ Xxxx Xxxxxxx
Name )------------------------------------
) XXXX XXXXXXX
-----------------------------------
Address )
)
-----------------------------------
)
)
Occupation )
SIGNED, SEALED and DELIVERED by )
XXXXX XXXXXXXXX in the presence )
of: )
)
/s/ Xxxxxxx X. Xxxxxxxx )/s/ Xxxxx Xxxxxxxxx
----------------------------------- )------------------------------------
Name ) XXXXX XXXXXXXXX
)
Address )
)
)
)
Occupation
0740613 B.C. LTD.
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Director
0753831 B.C. LTD.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Director
THE XXXXXX FAMILY TRUST NO.1, by
its Trustees
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: Trustee
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Trustee
THE XXXXXXX FAMILY TRUST NO. 1, by its
Trustees
By: /s/ Xxxx Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: Trustee
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: Trustee
THE XXXXXXXXX FAMILY TRUST NO. 1, by
its Trustees
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Trustee
By: /s/ Xxxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Trustee
THE STRIDE RITE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx, Xx.
Title: Secretary
STRIDE RITE CANADA LIMITED
By: /s/ Xxxxxxx X. Xxxxxxxxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx, Xx.
Title: Secretary
